Question

Jack Palomo has deposited $2,500 today in an account paying 6 percent interest annually. What would be the simple interest earned on this investment in five years?
A) $750; $95.56.
B) $150; $845.56.
C) $150; $95.56.
D) $95.56; $845.56.

Answer 1

Answer:

Option (A) $750

Explanation:

Data provided in the question:

Principle amount i.e the amount deposited = $2,500

Interest rate = 6% = 0.06

Time = 5 years

Now,

The formula for the Simple interest is given as:

Interest = Principle × Rate of interest × Time

Thus,

Interest = $2,500 × 0.06 × 5

or

Interest = $750

Hence,

Option (A) $750