Question

Mika invested $200 into a certificate of deposit. After 6 months, the balance was $220. What was the interest rate on the deposit?

I = prt
20 = (200)(r)(0.5)

A. 10%
B. 20%
C. 40%
D. 50%

Answer 1

The answer is  B. 20% fam.

Answer 2

B. 20%

Explanation:

Let r represent rate of interest.

We have been given that Mika invested $200 into a certificate of deposit. After 6 months, the balance was $220.

We will use simple interest formula to solve our given problem.

`I=Prt`

I = Amount of interest,

P = Principal amount,

r = Rate of interest in decimal form,

t = Time in years.

First of all, we will find amount of interest by subtracting $200 from $220 as:

`\$220-\$200=\$20`

6 month = 1/2 year = 0.5 year

Upon substituting our given values in simple interest formula, we will get:

`\$20=\$200*r*0.5`

`\$20=\$100*r`

Upon dividing both sides by $100, we will get:

`(\$20)/(\$100)=(\$100*r)/(\$100)`

`0.2=r`

Since interest rate is given in decimal, so we will multiply 0.2 by 100 to convert our answer in percentage.

`0.2* 100\%=20\%`

Therefore, the interest rate on the deposit was 20% and option B is the correct choice.