Question

After 8 years, Fabian earned $1430 in simple interest from a CD into which he

initially deposited $5500. What was the annual interest rate of the CD?
A. 0.48%
B. 4.8%
C. 0.325%
D. 3.25%

Answer 1

D. 3.25%

Explanation:

The formula for simple interest is:

I = Prt

where I is the interest earned, P is the principal, r is the annual interest rate, and t is the time in years.

We are given that:

I = $1430

P = $5500

t = 8 years

Substituting the values:

$1430 = $5500 * r * 8

Simplifying, we get:

r = $1430 / ($5500 * 8)

r = 0.0325 or 3.25%

Therefore, the annual interest rate of the CD is 3.25%.

Answer: D. 3.25%