Question

Assume that you set aside $500 per year, and invest that money over the next five years in an account earning 6%. What is the amount of interest you will earn on this investment?

Answer 1

150

Explanation:

This is a case of simple interest.

The formula for this is as follows:

S.I = PRT/100

P = principal = $500

R = Rate = 6%

T = Time .= 5 years

Substituting all in the earlier equation will yield:

S.I = (500 * 6 * 5)/100 = 15,000/100 = $150