Question

How much interest is earned in one year on $5000 at an interest rate of 3%

Answer 1

If we're talking about simple interest (and not compound interest), then

i = P*r*t

i = 5000*0.03*1

i = 150

$150 in simple interest is earned for the year

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notes:

• P = principal = amount invested or deposited = 5000
• r = 0.03 is the decimal form of 3%
• t = number of years that pass by = 1