Question

Keisha invested $7000 in a fund for 6 years and was paid simple interest. The total interest that she received on the investment was $2100. As a percentage, what was the annual interest rate of her investment?

Answer 1

Using the simple interest formula, the annual interest rate for Keisha's investment is calculated to be 5%.

Step-by-step explanation:

To calculate the annual interest rate for Keisha's investment, we'll use the formula for simple interest: I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years.

Keisha received a total interest of $2100 on her investment of $7000 over 6 years. Plugging the values into the formula, we have:

2100 = 7000 × R × 6

To find the rate R, we'll divide 2100 by the product of the principal amount and the number of years:

R = 2100 / (7000 × 6)

R = 2100 / 42000

R = 0.05

Since rates are typically expressed as percentages, we multiply R by 100:

Annual interest rate = R × 100

Annual interest rate = 0.05 × 100

Annual interest rate = 5%

Answer 2

We will have the following:

`\begin{gathered} 9100=7000(1+r(6))\Rightarrow(13)/(10)=1+6r \\ \\ \Rightarrow6r=(3)/(10)\Rightarrow r=(1)/(20) \\ \\ \Rightarrow r=0.05 \end{gathered}`

So, the annual interest rate was 5%.