Question

£100 is deposited in a bank paying 2.25% simple interest per annum. How much interest will have been paid after 5 years?

Answer 1

£11.25

Explanation:

The formula to calculate simple interest is given as:

Simple Interest = Principal × Rate × Time

Principal = Amount deposited in the bank = £100

Interest rate = 2.25%

Time in years = 5 years

Hence,

Simple Interest = £100 × 2.25% × 5

= £11.25

Therefore, the interest that will have been paid after 5 years is £11.25