Question

What is the simple interest paid to the nearest cent for $1,000 gaining 5% interest each year for two years

Answer 1

100.00

Explanation:

First, converting R percent to r a decimal

r = R/100 = 5%/100 = 0.05 per year.

Solving our equation:

A = 1000(1 + (0.05 × 2)) = 1100

A = $1,100.00

The total amount accrued, principal plus interest, from simple interest on a principal of $1,000.00 at a rate of 5% per year for 2 years is $1,100.00.