To calculate the simple interest of an invesment you have to use the following formula:
[tex]A=P(1+rt)[/tex]A= Total amount
P= principal invesment
r=interest rate, expressed as a decimal value
t= time
For a principal invespent of P=$1450, an interest rate of r=2.5/100=0.025 and a time of 2 years, the total amount is:
[tex]\begin{gathered} A=P(1+rt) \\ A=1450(1+0.025\cdot2) \\ A=1522.50 \end{gathered}[/tex]The interest paid I is equal to the total amount A minus the principal investment P
[tex]\begin{gathered} I=A-P \\ I=1522.50-1450 \\ I=72.5 \end{gathered}[/tex]The interest paid is $72.50
