Question

I put $300 into a back account that gives me 2.5% simple interest. How much interest do i earn after 3 years

Answer 1

Answer:

$23.07

Step-by-step explanation:

Present Value(PV) = $300

Interest rate(r) = 2.5 % or 0.025

Year(d) = 3 years

Find Future Value first.

This is the formula:

FV = PV(1 +r)$^{d}$

Put the values to it.

FV = 300(1 + 0.025)$^{3}$

FV = 300(1.025$)^{3}$

FV = 300(1.076890625)

FV = 323.0671875 or $323.07

The future value is $323.07. Now subtract it to the present value to get the interest.

323.07 - 300 = $23.07

The interest is $23.07