Question

A man intends to withdraw $ 24,000.00 from his savings at the end of 5 years. The man deposits $ 1,500.00 in savings annually and today has a balance of $ 8,000.00. What should be the savings interest rate for Nobuki to achieve his goals?

Answer 1

3%

Explanation:

Given data

FInal amount A= $24,000

Time= 5 years

Principal= $1,500

Say we the savings is on simple interest

A= P(1+rt)

substitute

24000=1500(1+r*5)

24000= 1500+ 7500r

24000-1500= 7500r

22500= 7500r

r= 22500/7500

r= 3%

Hence, on a simple interest account, the rate is 3%