Question

If $10,000 is deposited in an account that pays 5% simple interest, how much interest is earned at the end of 10 years? A $5,000 B$5.289 C$15,000 D $500,000

Answer 1

Answer:

A. $5,000

Explanation:

The interest earned after t years can be calculated as:

$I=P\cdot r\cdot t$

Where P is the initial amount, r is the interest rate and t is the number of years,

So, replacing P by 10,000, r by 0.05 (5% = 0.05), and t by 10, we get:

$\begin{gathered} I=10,000\cdot0.05\cdot10 \\ I=500^{}\cdot10 \\ I=5,000 \end{gathered}$

Therefore, the answer is $5,000