ASVAB · Interest, Discount, and Markup

How much simple interest is earned on $1,500 invested at 4% annual interest for 3 years?

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Correct answer

$180

A $60
B $180
C $1,680
D $200

Why this is the answer

Simple interest uses the formula I = P × r × t, where P is the principal, r is the annual rate as a decimal, and t is the time in years. Here I = $1,500 × 0.04 × 3 = $60 × 3 = $180. The interest earned is $180. Note the question asks only for the interest, not the total balance — the total would be $1,500 + $180 = $1,680, which is offered as a distractor. Memorize I = Prt for simple interest problems, convert the percent to a decimal (4% = 0.04), and multiply through carefully.

Source: ASVAB AR, Simple Interest

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About this topic: Interest, Discount, and Markup

Interest, discount and markup questions use the same percentage machinery: simple interest (principal × rate × time), sale prices after a discount, and selling price after a markup. Watch for two-step problems where the percentage applies to a changed amount. This is one of 9 Arithmetic Reasoning questions on interest, discount, and markup, each with a full explanation on a single study page.

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How much simple interest is earned on $1,500 invested at 4% annual interest for 3 years?

Why this is the answer

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About this topic: Interest, Discount, and Markup

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