Question

11 years ago, Sallie invested $21,000.00 into a savings account. She now has$27,064.00. What simple interest rate was her savings account earning? Assume theinterest rate has not changed since the account was opened.

Answer 1

Given:

Principal amount= $21000

Total amount = $27064

Time t=11 years

The simple interest rate is calculated as,

`\begin{gathered} A=P(1+rt) \\ (A)/(P)=1+rt \\ rt=(A)/(P)-1 \\ r=(1)/(t)((A)/(P)-1) \end{gathered}`

Here,

`\begin{gathered} A=27064,P=21000,t=11 \\ r=(1)/(t)((A)/(P)-1) \\ r=(1)/(11)((27064)/(21000)-1) \\ r=(1)/(11)*(6064)/(21000) \\ r=0.02625108 \end{gathered}`

Simple interest rate is,

`\begin{gathered} R=0.02625108*100 \\ R=2.6251\text{ \%} \end{gathered}`

Answer: 2.6251 %