Final answer:
To calculate simple interest, apply the formula I = Prt with P being $5,000, r as 1.2%, and t as 10 years. After converting the interest rate to a decimal and multiplying, the final interest earned on the investment after 10 years is $600.
Step-by-step explanation:
Calculating Simple Interest
Using the formula for simple interest I = Prt, where I is the interest, P represents the principal, r is the interest rate, and t is the time in years. To find the interest earned on a $5,000 investment at an interest rate of 1.2% over 10 years, you would calculate as follows:
I = $5,000 × 0.012 × 10
First, convert the interest rate from a percentage to a decimal by dividing by 100:
1.2% ÷ 100 = 0.012
Next, multiply the principal by the decimal rate and by the time in years:
I = $5,000 × 0.012 × 10 = $60 × 10 = $600
The simple interest earned over 10 years is $600.