Question

Linda invested 400 in a fund for 3 years and was paid simple interest. the total interest that she received on the investment was $24. as a percentage, what was the annual interest rate of her investment?

Answer 1

• Annual interest rate was 5%

Explanation:

Given

• The amount invested is P = $400,
• Th interest received is I = $24,
• Time is t = 3 years,
• Interest type is simple.

To find

• The annual interest rate r.

Solution

Use the simple interest equation:

• I = Prt

Substitute and solve for r:

• 24 = 400*3r
• 1200t = 24
• r = 24/1200
• r = 0.05 = 5/100 = 5%