Beau's grandmother started depositing $500 in a savings account each year in his birthday. The account pays 2.5% simple interest. How much
interest will the account earn after 3 years?
O $75
O $50
O $40

Given:

Beau's grandmother started depositing $500 in a savings account each  year in his birthday

Rate of simple interest = 2.5%

Time = 3 years

To find:

The interest.

Solution:

Formula for simple interest:

where, P is principal, r is rate of interest and t is time in years.

Interest for first year is

New principal =

Interest for second year is

New principal =

Interest for third year is

Total interest for 3 years is

So, interest after 3 years is $75.

Therefore, the correct options A.