Question

You put $5000 in an account. The account earns $2250 simple interest in 10 years. What is the annual interest rate?

Answer 1

You use the equation A=P(1+rt) and sub in the numbers.

Answer 2

4.5%.

Step-by-step explanation:

We have been given that you put $5000 in an account. The account earns $2250 simple interest in 10 years.

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

`I=Prt`, where,

I = Amount of interest after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

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

`2250=5000r*10)`

`2250=50000r`

Let us divide both sides of our equation by 50000.

`(2250)/(50000)=(50000r)/(50000)`

`0.045=r`

Let us multiply our rate by 100 to get our annual interest rate as percentage.

`0.045* 100=4.5\%`

Therefore, the annual interest rate is 4.5%.