Question

Mr. lira opened an account with a deposit of $2,000.

The account earned annual simple interest.
He did not make any additional deposits or withdrawals.
At the end of 7 years, the balance of the account was $3,500.
What is the annual interest rate on this account?

A) 25%

B) 30%

C) 22,5%

D) 27%

Answer 1

A) 25%

Explanation:

Simple interest rate = $3,500

Principal, p = $2,000

Time, t = 7 years

Rate, r = ?

Simple interest rate = (principal × rate × time) / 100

3,500 = (2,000 × r × 7) / 100

3,500 * 100 = 14,000r

350,000 = 14,000r

r = 350,000/14,000

r = 25%