Question

1. Sarah's current account balance is $2,600. She made a single lump sum amount of

$2,000 eight years ago into the account. Calculate the equivalent simple interest
rate (quoted annually) that she earned.

Answer 1

The simple interest that said investment yielded was 3.75% per year.

Explanation:

Given that Sarah's current account balance is $ 2,600, and she made a single lump sum amount of $ 2,000 eight years ago into the account, to calculate the equivalent simple interest rate (quoted annually) that she earned the following calculation must be performed:

(2,600 - 2,000) / 8 = X

600/8 = X

75 = X

2,000 = 100

75 = X

75 x 100 / 2,000 = X

7,500 / 2,000 = X

3.75 = X

Thus, the simple interest that said investment yielded was 3.75% per year.