Question

Interest earned by an investment is given by I = Prt, where I is the amount of interest earned, P is the principal amount, r is the interest rate, and t is the amount of time in years. How much interest will a $2,000.00 investment earn in 3 years with an interest rate of 8%?

a) $480
b) $4800
c) $160
d) $1600

Answer 1

Using the formula Interest = Principal × rate × time, the interest earned on a $2,000 investment at an 8% interest rate over 3 years is $480.00.

Step-by-step explanation:

To calculate the amount of interest a $2,000.00 investment will earn in 3 years with an interest rate of 8%, we can use the formula Interest = Principal × rate × time. Here, the Principal (P) is $2,000.00, the rate (r) is 8% or 0.08 when expressed as a decimal, and the time (t) is 3 years.

Plugging these values into the formula gives us:

Interest = $2,000.00 × 0.08 × 3

Interest = $160.00 × 3

Interest = $480.00

Therefore, the interest earned after 3 years is $480.00, which corresponds to option (a).