Question

How much interest is earned in one year for $5,000 at an interest rate of 3%?

Answer 1

The interest is $150 and the amount is $5150.

Explanation:

STEP 1: Find an interest by using the formula I=P⋅i⋅t, where I is interest, P is total principal, i is rate of interest per year, and t is total time in years.

In this example P = $5000, i = 3% and t = 1 years, so

I=P⋅i⋅t

I=5000⋅0.03⋅1

I=150=interest

STEP 2: Find an amount by using the formula A=P+I.

Since P = $5000 and I = $150 we have

A=P+I

A=5000+150

A=5150

Answer 2

Explanation:

To find the interest take 5,000 and divide it by .03 Make sure you use.03 because it is 3% not 30.