Question

The simple interest rate earned on a $1300 certificate of deposit held for 98 days, which was worth $1318.76, with a 360-day year is ________.

a) 3.0%
b) 3.5%
c) 4.0%
d) 4.5%

Answer 1

The simple interest rate earned on a $1300 certificate of deposit held for 98 days, which was worth $1318.76, with a 360-day year is approximately 5.3%.

Step-by-step explanation:

To find the simple interest rate, we can use the formula: Interest = Principal × Rate × Time. We are given that the Principal is $1300 and the Time is 98 days. We need to find the Rate. The amount after the interest has been added is $1318.76, so we can set up the equation as follows: 1318.76 - 1300 = 1300 × Rate × 98 / 360. Solving for Rate, we have: Rate = (1318.76 - 1300) × 360 / (1300 × 98).

1. Subtract 1300 from 1318.76: 1318.76 - 1300 = 18.76.
2. Multiply 18.76 by 360: 18.76 × 360 = 6753.6.
3. Multiply 1300 by 98: 1300 × 98 = 127400.
4. Divide 6753.6 by 127400: 6753.6 / 127400 ≈ 0.053.

Finally, convert the decimal to a percentage by multiplying by 100: 0.053 × 100 = 5.3%. Therefore, the simple interest rate earned on the $1300 certificate of deposit held for 98 days is approximately 5.3%.