To determine how much would be earned on a \[tex]$425 deposit earning 3% simple interest for 2 years, we can use the formula for simple interest:
\[ \text{Simple Interest} = P \times r \times t \]
where:
- \( P \) is the principal amount (initial deposit),
- \( r \) is the annual interest rate (expressed as a decimal),
- \( t \) is the time in years.
1. Identify the principal amount (\( P \)):
\[
P = \$[/tex] 425
\]
2. Convert the annual interest rate ([tex]\( r \)[/tex]) from a percentage to a decimal:
[tex]\[
r = \frac{3}{100} = 0.03
\][/tex]
3. Identify the time period in years ([tex]\( t \)[/tex]):
[tex]\[
t = 2 \text{ years}
\][/tex]
4. Substitute these values into the simple interest formula:
[tex]\[
\text{Simple Interest} = 425 \times 0.03 \times 2
\][/tex]
5. Calculate the simple interest:
[tex]\[
\text{Simple Interest} = 425 \times 0.03 = 12.75
\][/tex]
[tex]\[
\text{Simple Interest} = 12.75 \times 2 = 25.50
\][/tex]
Therefore, the amount earned in interest on a \[tex]$425 deposit earning 3% simple interest over 2 years is \$[/tex]25.50.
The correct answer is:
B. \$25.50
