A bank deposit of 5,000 BHD earns 6% annual simple interest. How much total interest is earned after 4 years?
Answer and explanation
Correct answer: B. 1,200 BHD
- Step 1: Use the simple interest formula: I = P r t.
- Step 2: Substitute P = 5000, r = 0.06, t = 4: I = 5000 0.06 4 = 300 * 4 = 1,200 BHD.
Answer
1,200 BHD.
Why not the others: Option 1,000 BHD uses a 5% interest rate. Option 1,500 BHD computes interest for 5 years. Option 1,262 BHD computes compound interest rather than simple interest.
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