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Question

You deposit Rs. 400 in to a bank account paying 5% simple interest per year. How much interest would you have earned after 3 years?

A
Rs. 30
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B
Rs. 60
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C
Rs. 45
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D
Rs. 55
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Solution

The correct option is B Rs. 60
First we need to find 5% of Rs. 400.
10% of Rs. 400 = Rs. 40 so 5% is Rs. 20.
As the bank pays simple interest, this amount stays the same.
Therefore, after 3 years you will have earned 20 + 20 + 20 = Rs. 60.

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