Question

How much interest is earned in 2 years on an investment of $2000? The interest rate is 3%.

Answer 1

In this sum we will calculate using the simple interest.

Simple interest is calculated from the formula :

I = PRT

where I is the interest, P is the principal, R is interest rate per year and t is time in years.

I = 2000 × 3 % x 2

We have to turn 3% to its decimal fraction which is 0.03, so:

I = 2000 × 0.03 × 2

I = 60 × 2

I = 120

Therefore the interest earned in two years will amount to 120 $