Answer:
The interest earned the following year = $75
Step-by-step explanation:
Interest = $75
Rate = 4%
Time = 1 year
To find the Principal, Using the formula for Simple Interest :
[tex]\text{Simple Interest = }\frac{Principal\times Rate\times Time}{100}\\\\\implies 75=\frac{Principal\times 4\times 1}{100} \\\\\bf\implies Principal = \$1875[/tex]
Now, to find amount of interest for the second year :
T = 2 years
t = 1 year
Principal = $1875
Rate = 4%
[tex]\text{Simple Interest = }\frac{Principal\times Rate\times (T-t)}{100}\\\\\implies\text{Simple Interest = }\frac{1875\times 4\times (2-1)}{100}\\\\\bf\implies\textbf{Simple Interest = }\$75[/tex]
Hence, The interest earned the following year = $75
