Sara earns 5% simple interest on her 2500 certificate of deposit. How much simple interest will Sara earn in 3 years

2875

Step-by-step explanation:

In a year, Sara will earn

2500 + 2500 * 5% * 1 = 2500 + 125 = 2625 (5% numerically is 0.05)

In two years, Sara will earn

2500 + 2500 * 5% * 2 = 2500 + 250 = 2750

In three years, she will earn

2500 + 2500 * 5%*3 = 2500 + 375 = 2875

2875 is the answer, however we can still yield this answer in a simple way

We can observe from the sequence of the years that there is a general formula. Indeed, there do exists a general formula and it is A = P (1+rt), where A is the earnings (2875), P is the principal amount (2500), r is the interest rate and t is the time period.

Applying the last formula we can find that:

A = 2500 (1+0.05*3) = 2875