Question

Sergio dropped his new freestyle mixtape and invested $12,000 of his

earnings into a savings account that earns him 2.5% simple interest. How
much interest will he have earned at the end of 5 years? *

A$1,800
B$1,500
C$1,200
D$150

Answer 1

B $1,500

Explanation:

Interest is computed using the formula ...

I = Prt

where P is the principal invested, r is the annual rate, and t is the number of years.

Using your numbers, we can find the interest as ...

I = $12,000×0.025×5 = $1,500

Sergio will have earned $1,500 in interest in 5 years.