Final answer:
To calculate the interest earned on a $2500 deposit at a 2% rate for 5 years, use the simple interest formula. Multiply the principal ($2500) by the rate (0.02) and the time (5 years) to get $250 in interest.
Step-by-step explanation:
To calculate the amount of interest earned on a $2500 deposit in an account for 5 years with a 2% interest rate, you can use the simple interest formula, which is Interest = Principal × Rate × Time.
For this example:
Principal (the initial amount deposited): $2500
Rate (interest rate per period): 2% or 0.02 as a decimal
Time (number of periods the money is invested): 5 years
Using the formula, we get:
Interest = $2500 × 0.02 × 5
Interest = $50 × 5
Interest = $250
The simple interest earned over 5 years is $250.