Question

A $20,000 investment earned a simple interest rate of 5.4%. How much interest was earned in one year?

Answer 1

Answer:

The interest earned in a year was $1080.

Step-by-step explanation:

Since the money was invested at a simple interest rate, then the amount earned in one year is given by the following formula:

M = C*r*t

Where M is the amount earned, C is the amount invested, r is the rate of interest and t is the time elapsed. Applying the data from the problem, we have?

M = 20000*(5.4/100)*1

M = 20000*0.054

M = 1080

The interest earned in a year was $1080.