Question

Justin deposited $2,000 into an account 5 years ago. Simple interest was paid on the account. He has just withdrawn $2,876. What interest rate did he earn on the account?

Answer 1

Answer:
`8.76\%`

Explanation:

The formula to find the final amount after getting simple interest :

`A=P(1+rt)`, where P is the principal amount , r is rate of interest ( in decimal )and t is time(years).

Given : Justin deposited $2,000 into an account 5 years ago.

i.e. P = $2,000 and t= 5 years

He has just withdrawn $2,876.

i.e. we assume that A = $2876

Now, Put all the values in the formula , we get

`(2876)=(2000)(1+r(5))\\\\\Rightarrow\ 1+5r=(2876)/(2000)\\\\\Rightarrow\ 1+5r=1.438\\\\\Righhtarrow\ 5r=0.438\\\\\Rightarrow\ r=(0.438)/(5)=0.0876`

In percent,
`r=0.0876*100=8.76\%`

hence, He earned
`8.76\%` of interest on account.