Question

Erica invests $10,000 at 5% interest compounded annually. How much interest will Erica earn in 3 years?
A. $1500.00
B. $1576.25
C. $11,500.00
D. $11,576.25

Answer 1

A. $1500.00

Answer 2

u know thats simple percentage

Answer 3

Since this is only for 3 years, you can do simple interest three times.
The original principal amount, $10,000, is 100% of the amount.
After one year earning simple interest of 5%, the amount becomes 105% of the original amount. Notice that 105% is the same as 1.05 * 100%.
That means that earning 5% simple interest over one year is the same as multiplying the original amount by 1.05.
Take the original amount, $10,000 and multiply it by 1.05 three times.
That gives you the total amount including interest at the end of 3 years.
Then subtract $10,000 from it to find the amount of interest earned.