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
• B. Rs. 60
• C. Rs. 45
• D. Rs. 55

Answer 1

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.