Question

A cooperative bank offers 0.50% of an annual simple interest rate for a savings account. How much interest will be earned if PHP 500,000 pesos are deposited for 2 years?

a. PHP 5,000
b. PHP 5,050
c. PHP 50,000
d. PHP 50,500

Answer 1

The amount of interest earned on the PHP 500,000 deposit after 2 years is PHP 5,000.

Step-by-step explanation:

To calculate the simple interest earned on a savings account, we use the formula:

Interest = Principal x Rate x Time

Given that the principal (deposit amount) is PHP 500,000, the rate is 0.50% (0.005 as a decimal), and the time is 2 years, we can substitute these values into the formula:

Interest = PHP 500,000 x 0.005 x 2 = PHP 5,000

Therefore, the amount of interest earned on the PHP 500,000 deposit after 2 years is PHP 5,000. The correct answer is option a. PHP 5,000.