Question

"You invest $35,000 in a savings account. When the loan ends in 15 years, you will have earned $23,625 in interest. What was the interest rate the bank gave you when the money got deposited?

Answer 1

The interest rate the bank gave for a deposit of $35,000 that earned $23,625 in interest over 15 years is 4.5%.

Step-by-step explanation:

To calculate the interest rate the bank gave you for a deposit of $35,000 where you earned $23,625 in interest over 15 years, we can use the formula for simple interest: I = PRT, where I is the interest earned, P is the principal amount deposited, R is the interest rate, and T is the time period in years.

Here, I = $23,625, P = $35,000, and T = 15 years. We are solving for R, the interest rate:

$23,625 = $35,000 × R × 15 years

Divide both sides by $35,000 × 15 to isolate R:

R = $23,625 / ($35,000 × 15)

R = $23,625 / $525,000

R = 0.045

To express this as a percentage, we multiply by 100:

Interest rate (R) = 4.5%