Stephen invests $2,500 in an account that pays 6% simple interest. How much money will Stephen have at the end of three years?
A) $2,650
B) $2,809
C) $2,950
D) $2,978
E) $3,000

Question

Quizplus · Accepted Answer

Simple interest is calculated using the formula $I = P \times r \times t$, where $I$ is the interest, $P$ is the principal amount, $r$ is the rate of interest per period, and $t$ is the time. For Stephen's investment, $P = $2,500$, $r = 6\% = 0.06$, and $t = 3$ years. Thus, the interest earned is $I = $2,500 \times 0.06 \times 3 = $450$. Adding this interest to the principal gives the total amount as $P + I = $2,500 + $450 = $2,950$.

Stephen Invests $2,500 in an Account That Pays 6% Simple