How much simple interest is earned after 3 years if a person invests $2,000 at 7 percent a year?(1 point)

1 answer

To calculate simple interest, you can use the formula:

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

where:

  • \( P \) is the principal amount (the initial amount of money),
  • \( r \) is the annual interest rate (in decimal form),
  • \( t \) is the time the money is invested or borrowed for, in years.

In this case:

  • \( P = 2000 \)
  • \( r = 7% = 0.07 \)
  • \( t = 3 \)

Now, plug in the values:

\[ \text{Simple Interest} = 2000 \times 0.07 \times 3 \] \[ \text{Simple Interest} = 2000 \times 0.21 \] \[ \text{Simple Interest} = 420 \]

Therefore, the simple interest earned after 3 years is $420.