1
year in his birthday. The account pays 2.5% simple interest. How much
interest will the account earn after 3 years?
O $75
O $50
O $40

1 Answer

2

Given:

Beau's grandmother started depositing $500 in a savings account each  year in his birthday

Rate of simple interest = 2.5%

Time = 3 years

To find:

The interest.

Solution:

Formula for simple interest:

I=\dfrac{P\times r\times t}{100}

where, P is principal, r is rate of interest and t is time in years.

Interest for first year is

I_1=\dfrac{500\times 2.5\times 1}{100}

I_1=12.5

New principal = 500+500=1000

Interest for second year is

I_2=\dfrac{1000\times 2.5\times 1}{100}=12.5

I_2=25

New principal = 1000+500=1500

Interest for third year is

I_3=\dfrac{1500\times 2.5\times 1}{100}=12.5

I_3=37.5

Total interest for 3 years is

I=I_1+I_2+I_3

I=12.5+25+37.5

I=75

So, interest after 3 years is $75.

Therefore, the correct options A.

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Rosa Grant Jr.
15.5k 3 10 26
answered 9 months ago