Question

Kelli Rae invested $220,000 in a savings account with simple interest. After 10 years, Kelli Rae had $250,000. What is the interest rate on this account?

Answer 1

Interest rate = 1.363% (Approx.)

Explanation:

Given:

Amount invested P = $220,000

Amount after 10 year = $250,000

Number of year = 10 year

Find:

Interest rate

Computation:

A = P + I

Amount of interest = $250,000 - $220,000

⇒ Amount of interest = $30,000

Amount of interest = PRT

⇒ 30,000 = (220,000)(R)(10)

⇒ 30,000 = (2,200,000)(R)

⇒ R = 0.013636

Interest rate = 1.363% (Approx.)