Find the amount if simple interest is paid yearly at 5% per annum for 3 years, on a principal of # 200,000.00

Analysis

To solve this problem, we need to distinguish between Simple Interest and the Amount. The question asks for the "amount," which is the total sum of the principal and the interest earned over the given period.

Concept

1. Simple Interest (SI) is calculated using the formula: $$SI = \frac{P \times R \times T}{100}$$ Where: • $P$ = Principal (the initial amount) = #200,000 • $R$ = Rate per annum = 5% • $T$ = Time in years = 3 years

2. Amount (A) is the total value after the interest is added: $$Amount = Principal + Simple Interest$$

Step-by-Step Solution

Step 1: Calculate the Simple Interest

Step 2: Calculate the Total Amount

Conclusion

The total amount after 3 years is #230,000.00. This matches option D.

Exam Tip

Always read the question carefully to see if it asks for the Interest or the Amount. Many students calculate the interest (#30,000) and stop there, choosing option B by mistake. Remember: Amount = Principal + Interest.