What is the total simple interest earned on a sum of $600, if the interest rate is 5% per annum for 3 years?

• A. $90
• B. $150
• C. $45
• D. $75

Answer: (A)

To calculate the total simple interest earned, you can use the formula for simple interest, which is given by:

[ \text{Simple Interest} = P \times r \times t ]

where:

• ( P ) is the principal amount (the initial sum of money),

• ( r ) is the annual interest rate (in decimal form),

• ( t ) is the time in years.

In this case, the principal amount ( P ) is $600, the interest rate ( r ) is 5%, which is equivalent to 0.05 in decimal form, and the time ( t ) is 3 years.

Plugging the values into the formula:

[ \text{Simple Interest} = 600 \times 0.05 \times 3 ]

Calculating this step-by-step:

1. Calculate ( 600 \times 0.05 ) which equals $30.

2. Then multiply $30 by 3 (the time period), which amounts to $90.

Thus, the total simple interest earned over 3 years at a 5% interest rate on a principal of $600 is $90. This confirms why the total interest calculated equals the correct answer.