Question

Jack Frost wins $22,500 for placing 1st in an ice sculpture contest. He chooses to deposit all of it in a bank that offers a 3% simple interest rate. How much interest will he earn in 5 years?

A. $3,375
B. $6,750
C. $1,350
D. $22,500

Answer 1

Jack Frost will earn $3,375 in simple interest over 5 years on a $22,500 deposit with a 3% interest rate, using the simple interest formula I = P × r × t.

Step-by-step explanation:

To calculate the simple interest that Jack Frost will earn in 5 years on his $22,500 deposit with a 3% interest rate, we use the simple interest formula:

I = P × r × t

Where:

• I is the interest
• P is the principal amount ($22,500)
• r is the annual interest rate (3% or 0.03)
• t is the time in years (5 years)

Now, let's calculate the interest:

I = $22,500 × 0.03 × 5

I = $675 × 5

I = $3,375

So, Jack Frost will earn $3,375 in simple interest over 5 years, which corresponds to option A.