Question

4. Danielle invested $2,300 in a savings account. After 9 years she had made $1,449 in interest. What was the interest rate for this account?

Answer 1

7% per year

Explanation:

The formula for Simple Interest rate is given as:

r = (1/t)(A/P - 1)

Where:

t = time in years = 9 years

P = Initial amount invested = $2300

A = Total amount after t years

= Interest + Principal

= $2300 + $1449

= $3749

r = (1/9) × ($3749/$2300 - 1)

r = 0.07

Converting r decimal to R a percentage

R = 0.07 * 100 = 7%/year