Question

Liliana invested $12,000 in an account that pays 3% annual interest. How much interest will Liliana earn on her investment at the end of 5 years?

a) $600
b) $1,860
c) $360
d) $1,800

Answer 1

Liliana will earn (Option d) $1,800 in interest at the end of 5 years with her $12,000 investment at a 3% annual interest rate, according to the simple interest formula I = P × r × t.

Step-by-step explanation:

To calculate how much interest Liliana will earn on her investment at the end of 5 years with a 3% annual interest rate, we can use the formula for simple interest, which is:

I = P × r ×t

where:

• I is the interest
• P is the principal amount ($12,000)
• r is the annual interest rate (3%, or 0.03 as a decimal)
• t is the time in years (5 years)

Plugging the values into the formula gives us:

I = $12,000 × 0.03 × 5

Calculating this, we get:

I = $1,800

So, the correct answer to how much interest Liliana will earn at the end of 5 years is (d) $1,800.