Question

Mark wants to invest $50,000 in one of two options. If he chooses Option A with a simple interest rate of 3.45%, how much interest will he earn after 4 years?

a) $6,900
b) $7,800
c) $8,625
d) $9,000

Answer 1

Using the simple interest formula, Mark will earn $6,900 in interest after investing $50,000 at a simple interest rate of 3.45% for 4 years.

Step-by-step explanation:

To determine the interest earned from Option A with a simple interest rate of 3.45% after 4 years, we can use the formula for simple interest, which is I = PRT (Interest equals Principal times Rate times Time).

Here, P is the principal amount which is $50,000, R is the rate of interest per year which is 3.45% or 0.0345 in decimal form, and T is the time the money is invested for which is 4 years.

Plugging these values into the formula gives:

I = $50,000 × 0.0345 × 4

I = $6,900

Therefore, after 4 years, Mark would earn $6,900 in simple interest if he chooses Option A.