Question

Areli invested a principal of $$950$in her bank account with interest rate $3$%. How much interest did she earn in $5$years?

Short answer

If Areli invested a principal of $$950$in her bank account with interest rate $3$% then she will earn $$142.5$as simple interest in five years.

Step-by-step solution

Step 1. Given information   

principal $P=\$950$

Interest rate$$\begin{gathered} r=3\% \\ r=0.03 \end{gathered}$$

Time$t=5$

Step 2. Interest amount

Consider the amount of interest is I

Substitute principal, interest rate, and time in Simple interest formula

$$\begin{gathered} I=Prt \\ I=\left(950\right)\left(0.03\right)\left(5\right) \\ I=142.5 \end{gathered}$$

So the interest earned by areli is $$142.5$.

Step 3. Verification

With a time of $5$years and interest rate of $3$%, $$142.5$is the simple interest of the principal

$$\begin{gathered} I=Prt \\ 142.5=P\left(0.03\right)\left(5\right) \\ 142.5=P\left(0.15\right) \\ \frac{142.5}{0.15}=P \\ 950=P \end{gathered}$$

So $$142.5$is a simple interest of principal $$950$, interest rate$3$%, and time$5$years.