The simple interest payable on an initial investment of $5000 invested at 6% per annum for three years will be:

Question

BlackTom AI · Accepted Answer

Simple interest = principal × annual rate × time, so use I = P × r × t.

1. Relevant knowledge points and concepts
- Simple interest is calculated only on the original principal, not on accumulated interest.
- Formula: I = P × r × t, where P = principal, r = annual interest rate (decimal), t = time in years.
- Convert percent to decimal by dividing by 100 (6% = 0.06).

2. Step-by-step reasoning
- Identify the values: P = $5,000; r = 6% = 0.06; t = 3 years.
- Apply the simple interest formula.

3. Intermediate calculation steps
- Annual interest: P × r = 5,000 × 0.06 = 300 (dollars per year).
- Total interest for 3 years: annual interest × t = 300 × 3 = 900.
- Or directly: I = 5,000 × 0.06 × 3 = 5,000 × 0.18 = 900.

4. Why the correct answer is correct
- The calculation follows the simple interest formula exactly and yields $900. This is the total interest paid over the three-year period on the $5,000 principal at 6% per year.

5. Why the other options are incorrect
- a. $955: Not derived from the simple interest formula; could be a mistaken compound-interest value or arithmetic error.
- b. $300: This equals one year’s interest (5,000 × 0.06) but not the total for three years.
- d. $3000: This would be the result if the annual rate were 20% (5,000 × 0.20 × 3 = 3,000), so it does not match a 6% rate.

6. Conclusion
The correct simple interest payable is $900, which corresponds to option c. This matches the provided answer.

The simple interest payable on an initial investment of $5000 invested at 6% per annum for three years will be:Single choice

Similar Questions

Simple interest at a rate of 6% per annum is paid on an investment of $1,500. The term of the investment is chosen so that the total interest earned is at least $540. The minimum term for this investment, to the nearest month, is:

Simple interest at a rate of 6% per annum is paid on an investment of $1,500. The term of the investment is chosen so that the total interest earned is at least $540. The minimum term for this investment, to the nearest month, is:

The amount which should be invested at 4.5% per annum simple interest, if you require $15 700 in three years’ time, is closest to:

Simple interest at a rate of 7.5% per annum is paid on an investment of $1200.The term of the investment is chosen so that the total interest earned will be at least $460.The minimum term for this investment, to the nearest month, is:

The amount which should be invested at 4.5% per annum simple interest, if you require $15 700 in three years’ time, is closest to:

Simple interest at a rate of 7.5% per annum is paid on an investment of $1200.The term of the investment is chosen so that the total interest earned will be at least $460.The minimum term for this investment, to the nearest month, is:

What is the future value of $124.49 after earning simple interest for five years at an annual rate of 10%?

More Practical Tools for Students Powered by AI Study Helper

Homework AI Solver

Stylized AI Paper Writer

Plagiarism Checker Assistant

Citation AI Academic Writing Tool

In-Class Translation Assistant

AI Note Generator

AI Quiz Answers

Past Exam Questions from University Test Bank

Smart Practice Assistant

Adaptive Practice

Making Your Study Simpler