Question

Kelli Rae's inheritance from her great-grandmother was 220000 after taxes. If Kelli Rae invests this money in a savings account that earns $18260 in simple interest every year, what is the interest rate

Answer 1

The interest rate is 8.3%

Explanation:

we know that

The simple interest formula is equal to

`I=P(rt)`

where

I is the Final Interest Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=1\ year\\ P=\$220,000\\I=\$18,260\\r=?`

substitute in the formula above

`18,260=220,000(r*1)`

`r=18,260/220,000`

`r=0.083`

Convert to percent form

`r=0.083*100=8.3\%`