Answer:
I(Interest) = $6.25
Step-by-step explanation:
The formula for Simple Interest
A = P(1 + rt)
Where
A = Amount after t years
P = Principal, initial amount invested = $125
r = Interest rate = 2.5%
t = time in years = 2 years
Step I
We the interest rate to a decimal
r = R/100 = 2.5%/100 = 0.025 per year.
Step 2
A = 125(1 + (0.025 × 2))
A = $131.25
The Amount received after 2 years = $131.25
The amount of interest Sarah received after 2 years
I = A - P
I = $131.25 - $125
I = $6.25
