With principal 200, rate 5% per year, time 2 years, what is the interest earned and total amount?

• A. I = 40, total = 240
• B. I = 20, total = 220
• C. I = 10, total = 210
• D. I = 50, total = 250

Answer: (B)

This tests understanding of simple interest. The interest earned is calculated as principal × rate × time. Convert the rate to a decimal: 5% = 0.05. With a principal of 200 and time of 2 years, interest = 200 × 0.05 × 2 = 20. The total amount after 2 years is the principal plus interest: 200 + 20 = 220. So the correct pairing is I = 20 and total = 220. The other values would require a different rate or time, which isn’t the case here.