Question

Laura invested $24,000 into a simple interest account. If at the end of 54 months Laura has $27,780 in her account, what was the interest rate? (Round to the nearest hundredth, if necessary)

Answer 1

3.5%

Explanation:

First you need to know the simple interest and the amount formulas. This is as expressed as;

Interest I = PRT/100 ... 1

Amount A = P+I ...2

From 2;

I = A - P ....3

Substitute 3 into 1

A - P = PRT/100

Given the following

Amount A = $27,780

Principal P = $24000

Time T = 54/12 yrs

Required

Rate R

Substitute

$27,780 - $24000 = 24000 * R * 54/1200

3,780 = 20 * 54R

3780 = 1080R

R = 3780/1080

R = 3.5%

Hence the interest rate is 3.5%