Question

You deposit $750 into a bank account. The bank pays a simple interest rate of 3%. How much interest have you earned

after three years?

Answer 1

You have earned $67.50

Explanation:

Since we are working with simple interest, we will use this formula:

`I=Prt`,

where P represents the principal amount (your deposit), r represents the rate as a decimal, and t represents the time in years. First, we need to rewrite our interest as a decimal by dividing 3% by 100:

`3/ 100 = 0.03`

Now, we also know the values of P and t from the problem:

`P=750\\r=0.03\\t=3`

We can substitute those values into the formula:

`I=750(0.03)(3)\\I=67.5`

In context, that means you earned $67.50 in interest.

Answer 2

To calculate the interest earned over a period of time, we use the formula for simple interest:

I = PRT,

where:
I is the interest,
P is the principal amount (the initial amount of money),
R is the interest rate (in decimal form),
T is the time (in years).

First, we identify the values from the question:

P = $750, our initial deposit,
R = 3/100 = 0.03, the 3% annual interest rate,
T = 3, the time in years.

We then substitute these values into our formula:

I = PRT
I = 750*0.03*3

So, the interest earned over the three years is $67.5.

Answer: $67.5