Multiple choice

How much interest will a person earn after 4 years if he deposits $5,000 in a savings account with an annual simple interest rate of 5%?

  1. $900
  2. $1,000
  3. $1,100
  4. $1,200
  5. $1,300
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B Correct answer
Explanation

Simple interest is calculated using the formula I = P * r * t. Here, P = 5000, r = 0.05, and t = 4, so I = 5000 * 0.05 * 4 = 1000.

AI explanation

The formula for simple interest is principal multiplied by rate multiplied by time divided by 100. Substituting the given values, the interest equals 5000 multiplied by 5 multiplied by 4, and then divided by 100. The total interest earned is $1,000.

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