Question

José put $1,500 into a savings account. He earns 3% interest every year. How much simple interest will he earn at the end of 3 years?


$45.00
$135.00
$4,500.00
$13,500.00

Answer 1

To calculate the simple interest earned over a period of time, you can use the formula:

\[
\text{Simple Interest} = P \times r \times t
\]

where:
- \( P \) is the principal amount (initial amount of money),
- \( r \) is the annual interest rate (as a decimal),
- \( t \) is the time in years.

In this case:
- \( P = 1500 \)
- \( r = 3\% = 0.03 \)
- \( t = 3 \)

Now, plug these values into the formula:

\[
\text{Simple Interest} = 1500 \times 0.03 \times 3
\]

Calculating this step-by-step:

1. Calculate \( 1500 \times 0.03 \):
\[
1500 \times 0.03 = 45
\]

2. Now multiply by 3:
\[
45 \times 3 = 135
\]

So, the simple interest José will earn at the end of 3 years is **$135.00**.

The correct answer is **$135.00**.