Question

Roger deposited $4,000 in a savings account with simple interest. Five years later, he had

earned $2,800 in interest. What was the interest rate?

Answer 1

14%

Explanation:

Solve for % Rate over a 5 year period with simple interest:

Formula: R = (1/5)(6800/4000) - 1) = 0.14

r = 0.14

R = 0.14 * 100 = 14%/year

Or

$6800-$4000 = $2800 (Amount earned over 5 year period)

$2800/5 Years = $560(Amount earned per year)

$4000(Original amount which interest is built upon) /$560 = 14

Answer = 14%/year

Answer 2

14%

Explanation:

We can use the formula for simple interest:

I = P * r * t

where I is the interest earned, P is the principal (the initial deposit), r is the interest rate, and t is the time in years.

We know that Roger deposited $4,000 and earned $2,800 in interest after 5 years. So we can set up the equation:

2,800 = 4,000 * r * 5

Simplifying the equation, we get:

r = 2,800 / (4,000 * 5) = 0.14 or 14%

Therefore, the interest rate was 14%.