Question

Compute the amount of interest earned in the following simple interest problem. A deposit of $5,000 at 8.5% for 120 days = _____.

$1,402.50
$141.67
$14,025
$51,000

Answer 1

To compute the amount of interest earned in this simple interest problem, we can use the formula:

I = P * r * t

Where:
I = interest earned
P = principal amount (deposit)
r = interest rate (as a decimal)
t = time (in years)

First, we need to convert the time period of 120 days to years by dividing by the number of days in a year (365):

t = 120/365
t = 0.3288 years

Next, we can plug in the values we have into the formula and solve for I:

I = 5,000 * 0.085 * 0.3288
I = $141.67

Therefore, the amount of interest earned in this simple interest problem is $141.67.