Question

Elmer invested $100 into a savings account that earns annual simple interest. At the end of 3 years, he earned $15 in interest. What is the interest rate on the savings account? Round to the nearest tenth of a percent.​

Answer 1

To find the interest rate, we can use the formula for simple interest:

I = Prt

Where:

I = Interest earned

P = Principal (initial investment)

r = Interest rate

t = Time

We are given that P = $100, t = 3 years, and I = $15. Substituting these values, we get:

15 = 100 * r * 3

Solving for r, we get:

r = 15 / (100 * 3) = 0.05

Therefore, the interest rate on the savings account is 5%.