Question

Rita deposited $500 in a savings accpit earning simple interest. She made no other deposits or withdrawals. After 3 years the account is worth $533.75. What is the interest rate on the account?

Answer 1

the interest rate on the account is 2.25%.

Explanation:

To solve the problem, we can use the formula for simple interest:

I = Prt

where I is the interest earned, P is the principal (the initial amount deposited), r is the interest rate (expressed as a decimal), and t is the time (in years).

We know that Rita deposited $500, and after 3 years the account was worth $533.75. So the interest earned is:

I = $533.75 - $500 = $33.75

We can now plug in the values we know into the formula and solve for r:

33.75 = 500 * r * 3

r = 33.75 / (500 * 3)

r = 0.0225 or 2.25%

Therefore, the interest rate on the account is 2.25%.

Answer 2

2.25%

Explanation:

You want the simple interest rate that makes a $500 investment have a value of $533.75 after 3 years.

Account value

The value of an investment P earning simple interest at rate r for t years is ...

A = P(1 +rt)

For the given amounts, we have ...

533.75 = 500(1 +r·3)

1.0675 = 1 +3r . . . . . . . . divide by 500

0.0675 = 3r . . . . . . . . . . subtract 1

0.0225 = r = 2.25% . . . . divide by 3

The interest rate on the account is 2.25%.