Question

Nancy made $31,200 in interest by placing $80,000 in a savings account with simple interest for 3 years. What was the interest rate?

Answer 1

13%

Explanation:

You want the simple interest rate that results in interest of $31,200 on $80,000 in 3 years.

Interest

The simple interest formula is ...

I = Prt

where P is the principal invested, r is the annual rate, and t is the number of years.

Filling in the given values, we can solve for r:

31200 = 80000·r·3

r = 31200/240000 = 312/2400 = 0.13 = 13%

The interest rate on Nancy's account was 13%.