Question

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Q1 Sara puts $4,000 into an investment yielding 5% annual simple interest; she left the money in for five years. How much interest does Sara get at the end of those five years?

Answer 1

Simple interest formula: I = P·r·t.

Given P = \$4,000, r = 5% = 0.05, t = 5 years:

I = 4000 × 0.05 × 5 = 4000 × 0.25 = \$1,000.

So Sara earns \$1,000 in interest.