Question

$15,000 is invested for 3 months at an annual simple interest rate of 2%. (a) How much interest will be earned? $ (b) What is the future value of the investment after 3 months? $ ______

Answer 1

The interest earned is $75, and the future value of the investment after 3 months is $15,075.

Step-by-step explanation:

To calculate the interest earned, we can use the formula: Interest = Principal x Rate x Time. In this case, the principal is $15,000, the rate is 2% (or 0.02 in decimal form), and the time is 3 months (or 1/4 of a year). Therefore, the interest earned is: $15,000 x 0.02 x 1/4 = $75.

To find the future value of the investment, we can use the formula: Future Value = Principal + Interest.

1. Interest = $75 (calculated in the previous step)

2. Future Value = $15,000 + $75 = $15,075.