If a sum of $1200 is invested at an annual simple interest rate of 5% for 2 years, what is the total interest earned?

$180

$150

$120

$200

To find the interest earned using the simple interest formula, use:

Simple Interest = 𝑃 × 𝑟 × 𝑡

where:

P is the principal amount ($1200),

r is the annual interest rate (5% or 0.05),

t is the time in years (2 years).

Substitute the values into the formula:

Simple Interest=1200×0.05×2

Calculate:

Simple Interest=1200×0.05=60

Simple Interest=60×2=120