Question

If you invest $10,000 at an annual rate of 7%, how much interest will you earn after one year?

Answer 1

10000 multiplied by 7/100(7%) multiplied by 1 (amount of years) =$700 interest

Answer 2

$700 interest will earn after one year.

What is Simple Interest ?

Simple interest is calculated with the following formula: S.I. = P × R × T,

where P = Principal, R = Rate of Interest in % per annum, and T = Time, usually calculated as the number of years. The rate of interest is in percentage R% and is to be written as R/100.

Amount = Principal + Simple Interest

A = P + S.I.

Given data as :

Principal amount (P) = $10,000

Annual rate (R) = 7%

Time (T) = 1  year

∵ Simple interest  = P × R × T,

Substitute the values of P, R and T in the Simple interest formula,

Simple interest  = 10000 × 7% × 1

Simple interest  = 10000 × 7/100 × 1

Simple interest  = 10000 × 0.07 × 1

Simple interest  = 700

Hence, $700 interest will earn after one year.

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