Question

Maggie has $14,100 to invest, and wishes to gain $4,000 in interest over the next eight years. Approximately what is the minimum simple interest rate Maggie needs to reach her goal?

a. 2.89%


b. 3.55%


c. 4.95%


d. 5.18%

Please select the best answer from the choices provided



A
B
C
D

Answer 1

Simple interest doesn't compound, so we just find the interest she needs by dividing 4,000 by 8, and then divide that number by her principal to find the rate of interest.

4,000 ÷ 8 = 500
She needs 500 dollars per year in interest.

800 ÷ 14,100 = .0355 = 3.55%

Answer is B