Question

A bank says you can do or your money in 10 years if you put 1000 in in a simple interest account.What annual interest rate does the bank Pay?

Answer 1

`r=10\%`

Explanation:

The correct question is

A bank says you can double your money in 10 years if you put $1,000 in a simple interest account. What annual interest rate does the bank pay?

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=10\ years\\ P=\$1,000\\ A=\$2,000\\r=?`

substitute in the formula above

`2,000=1,000(1+10r)`

Solve for r

Divide by 1,000 both sides

`2=1+10r`

Subtract 1 both sides

`10r=2-1`

`10r=1`

Divide by 10 both sides

`r=1/10`

`r=0.10`

Convert to percentage (multiply by 100)

`r=0.10*100=10\%`