Question

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Sam deposited $3,150 into a savings account that pays annual
simple interest. At the end of 7 years, he earned $286.65 in interest.
What is the interest rate on the savings account? Provide an answer
accurate to the nearest tenth of a percent. You may also answer in
decimal form.
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Answer 1

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

Interest = Principal × Rate × Time

In this case, the principal (P) is $3,150, the interest (I) is $286.65, and the time (T) is 7 years. We need to solve for the rate (R).

286.65 = 3,150 × R × 7

To find R, we can rearrange the equation:

R = 286.65 / (3,150 × 7)

R ≈ 0.013 or 1.3% (rounded to the nearest tenth of a percent)

Therefore, the interest rate on the savings account is approximately 1.3% or 0.013 in decimal form.