How much does 2.5 billion dollars receive on 2.5 interest rate?

Answer 1

Over what period of time? It obviously depends on how long the money is earning interest, whether the interest rate is the annual interest rate, and whether it is compounded at intermediate periods during the year. For the purposes of this question it is probably reasonable to assume you are interested in how much interest it earns over a period of 1 year without compounding.

$2,500,000,000 ($2.5 Billion), at the ANNUAL rate of 2.5%, for the period of one year, equals an amount of $62,500,000

The formula for interest is

Interest = Principal x Rate x Time

If you are investing for under a year your time needs to be expressed as a decimal or a fraction. If the APR (annual percentage rate) is 2.5% then the effective Monthly percentage rate would be 2.5%/12 = 0.208333% or 5/24 %. At that rate you would earn about $5,208,333 in one month. If the APR is 2.5% and is compounded monthly, the formula would be

Interest = Principal x ((1 + APR/12)n-1) = Principal x ((1.00208)n-1)

where "n" is the number of months the principal is left to earn interest.

By that formula the interest would be

1 month $5. 208,333

2 months $10,427,517

3 months $15,657,575

4 months $20,898,528

5 months $26,150,400

6 months $31,413,213

7 months $36,686,991

8 months $41,971,755

9 months $47,267,530

10 months $52,574,337

11 months $57,892,200

12 months $63,221,142 (1 year)

The difference between the 1 year interest this way and the original $62,500,000 quoted earlier is the effect of compounding it monthly.