Navy Academic Proficiency Test (NAPT) Practice Exam

What is the simple interest earned on $100 at 5% for 2 years?

$8 $9 $10 $12

Correct Answer:

$10

Explanation:

Interest from simple interest is found by multiplying the principal by the annual rate and the time: I = P × r × t. Here P is 100 dollars, r is 0.05 (5%), and t is 2 years. So I = 100 × 0.05 × 2 = 10 dollars. At a 5% rate, you earn 5 dollars each year on 100, for two years totaling 10. Since this is simple interest, there’s no additional interest on the interest.

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