Question

Tammy deposited $520 in the bank account that earns simple interest every year after 5 years she had earned $156 and interest if no money was deposited into or withdrawn from the account what was the annual interest rate

Answer 1

6%.

Explanation:

We have been given that Tammy deposited $520 in the bank account that earns simple interest every year after 5 years she had earned $156.

To find the interest rate we will use simple interest formula.

`I=P*r*T`

I= Interest.

P= Principal amount.

r=Annual interest rate (in decimal form).

T= Time in years.

We have been given that I=156, T=5, P=520

Upon substituting our values in above formula we will get,

`156=520*r*5`

`156=2600r`

`r=(156)/(2600)`

`r=0.06`

Let us multiply 0.06 by 100 to convert annual interest rate in percentage.

`0.06*100=6 \text{ percent}`

Therefore, the annual interest rate was 6%.