William purchases a savings bond from the United States Treasury. The principal amount of the bond is $3,000

Question

, and the terms of the bond are a 5%
yield with a maturity date set for 8 years in the future from the date of purchase. William is trying to calculate his return on his investment. What is the amount of interest William can expect to earn over the lifetime of the bond?(1 point)
Responses

$150
150 dollars

$3,150
3,150 dollars

$1,200
1,200 dollars

$4,200

Answer 1

To calculate the amount of interest William can expect to earn over the lifetime of the bond, you can use the formula for simple interest:

\[ \text{Interest} = \text{Principal} \times \text{Rate} \times \text{Time} \]

Where:

• Principal = $3,000
• Rate = 5% (or 0.05 when expressed as a decimal)
• Time = 8 years

Plugging in the values:

\[ \text{Interest} = 3,000 \times 0.05 \times 8 \]

Calculating that:

\[ \text{Interest} = 3,000 \times 0.40 = 1,200 \]

So, the amount of interest William can expect to earn over the lifetime of the bond is $1,200.

The correct response is:

$1,200