Question

Giselle deposited $3500 into a savings account for which simple interest is calculated monthly. If her $3500 grew to $3514 after 1 month, what is the yearly interest rate on Giselle's account? A. 0.48% B. 4% C. 0.4% D. 4.8%

Answer 1

A=p(1+rt)
3514=3500(1+(1/12)r)
Solve for r
r=0.048*100=4.8%

Answer 2

D. 4.8 %.

Explanation:

Since, the amount after getting simple interest on an amount is,

`A=P+(P* r* t)/(100)`

Where, P is the principal amount,

r is the rate of interest per period,

t is the number of periods,

Here, P = $ 3500,

t = 1 month,

A = $ 3514,

Let R be the annual rate of percentage,

Thus, the rate per month = R/12 %,

By substituting the value in the above formula,

`3514 = 3500 + (3500* (R)/(12)* 1)/(100)`

`14 = (3500R)/(1200)`

`16800 = 3500R`

`\implies R = 4.8\%`

Hence, the annual rate of interest on account is 4.8 %.