Question

If you invest money, after a certain period of time you’ll get interest. For example, if you invest $2,000 at 5% annual interest rate, in a year you will have $2,000∙0.05=$100 of annual simple interest in addition to the original amount. If you invest $250.00 at 4% interest rate, what will be the interest?

Answer 1

$250,000 x 0.04 = 10,000 in addition to the original amount

Answer 2

The interest at 4 % of $250.00 will be $10

Explanation:

If you invest money, after a certain period of time you’ll get interest.

For example, if you invest $2,000 at 5 % annual interest rate, in a year you will have ( $2,000 ) x ( 0.05 ) = $100 of annual simple interest in addition to the original amount.

If you invest $250.00 at 4% interest rate, the interest will be ( $250.00 ) x( 0.04 ) = $10.

Simple interest is based on arithmetic progression and compound interest is based on geometric progression.