Question

If you put $1,000 in the bank at an interest rate of 6.75%, how much interest would you earn in a year?

a) $67.50
b) $57.50
c) $75.00
d) $65.00

Answer 1

Using the simple interest formula, the interest on a $1,000 deposit at an annual interest rate of 6.75% for one year is $67.50, corresponding to option (a).

Step-by-step explanation:

To calculate the interest earned on a deposit in a bank at a specified interest rate, we can use the formula for simple interest, which is Interest = Principal × Rate × Time. Given a principal of $1,000 and an interest rate of 6.75% (expressed as a decimal equivalent 0.0675 for calculation purposes), and the time is 1 year, we can substitute these values into the formula to find the interest earned in one year.

Interest = $1,000 × 0.0675 × 1

Interest = $67.50

Therefore, the amount of interest you would earn in a year on a $1,000 deposit at an interest rate of 6.75% would be $67.50. The correct answer is (a) $67.50.

Answer 2

a) $67.50

Step-by-step explanation:

multiplier = (100 + 6.75)/100 = 1.0675

1000 x 1.0675¹ = 1067.5

1067.5 - 1000 = 67.5