Final answer:
The effective interest rate in the 7th year at a simple interest rate of 5% remains 5%, since simple interest does not compound over time.
Step-by-step explanation:
Calculating Effective Interest Rate in the 7th Year
The question pertains to finding the effective interest rate in the 7th year given a simple interest rate of 5%. It is important to clarify that the effective interest rate and the nominal (or quoted) simple interest rate are the same when dealing with simple interest, as it does not compound. Thus, if you invested an amount at a simple interest rate of 5%, the effective rate of interest in the 7th year remains 5%.
For a practical example, if you had a $100 deposit at a simple interest rate of 5% held for one year, the interest for that year would be:
$100 × 0.05 × 1 = $5
If you keep the amount for seven years, the interest earned each year does not change, because simple interest is calculated on the original principal only.