Question

Terry deposits a principal amount of $500 in a savings account that earns an annual rate of simple interest. If he makes no deposits or withdrawals, he will earn $40 in simple interest in 4 years. What is the annual rate of simple interest?

Answer 1

`~~~~~~ \textit{Simple Interest Earned} \\\\ I = Prt\qquad \begin{cases} I=\textit{interest earned}\dotfill & \$40\\ P=\textit{original amount deposited}\dotfill & \$500\\ r=rate\to r\%\to (r)/(100)\\ t=years\dotfill &4 \end{cases} \\\\\\ 40 = (500)((r)/(100))(4) \implies 40=20r\implies \cfrac{40}{20}=r\implies \stackrel{\%}{2}=r`