To determine how much interest a deposit of [tex]$15,000 would earn in one year at a nominal interest rate of 3 percent, follow these steps:
1. Identify the principal amount (P):
The principal amount is the initial amount deposited, which is $[/tex]15,000.
2. Identify the nominal interest rate (r):
The nominal interest rate is given as 3 percent. To use this rate in calculations, it must be converted to a decimal.
[tex]\( 3\% = 0.03 \)[/tex]
3. Determine the time period (t):
The time period for calculating the interest is 1 year.
4. Use the simple interest formula:
The formula for calculating simple interest (I) is:
[tex]\[
I = P \times r \times t
\][/tex]
5. Substitute the known values into the formula:
- Principal (P) = [tex]$15,000
- Interest rate (r) = 0.03
- Time period (t) = 1 year
\[
I = 15000 \times 0.03 \times 1
\]
6. Calculate the interest:
Performing the multiplication:
\[
I = 15000 \times 0.03 \times 1 = 450 \text{ dollars}
\]
Therefore, a deposit of $[/tex]15,000 at a nominal interest rate of 3 percent will earn [tex]$450 in interest over one year. The correct answer is:
C. $[/tex]450
