alleryStart learning →A saver puts $36,000 in a bank account paying 6.5% interest. How much simple interest does the account earn in 3 years?
A$7,020
B$2,340
C$6,480
D$70,200
Answer & Solution
Correct answer: A. $7,020
1. Use the simple interest formula I = Prt.
2. Change 6.5% to a decimal: 0.065.
3. Substitute: I = 36,000 x 0.065 x 3.
4. Multiply: 36,000 x 0.065 = 2,340, then 2,340 x 3 = 7,020.
5. So the interest earned is $7,020, while $2,340 is the trap of stopping after one year instead of three.
_Source: OpenStax Prealgebra (CC BY 4.0), Ch 6 "Percents", section 6.4 Solve Simple Interest Applications_
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