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How much simple interest does $800 earn at 5% for 2 years?

$80, from I = principal x rate x time.

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  1. $80 ✔
  2. $40
  3. $120

Why: Interest = 800 x 0.05 = 40 per year. For 2 years: 40 x 2 = 80.

Huh, didn't know that: Simple interest earns the same amount each year because it is based only on the original principal.

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Why did the banker break up with the calculator? He lost interest.
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References

Answer: $80. Interest = 800 x 0.05 = 40 per year. For 2 years: 40 x 2 = 80.

  1. OpenStax Prealgebra 2e, Solve Simple Interest Applications openstax.org/books/prealgebra-2e/pages/6-4-solve-simple-interest-applications
    The formula we use to calculate simple interest is I=Prt.
    Checked 2026-10-13.

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