Question

Determine the interest earned on a 3 and 1/4 year investment of $2880 at a rate of 4.5%

Answer 1

The interest earned is $421.2.

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.

In this question:

`P = 2880, I = 0.045, t = 3 + (1)/(4) = 3.25`

So

`E = P*I*t`

`E = 2880*0.045*3.25`

`E = 421.2`

The interest earned is $421.2.