Question

At what simple annual interest rate must $2,500 be invested if it is to earn $225 in interest in one year?

A) 6%
B) 7%
C) 8%
D) 9%
E) 10%

Answer 1

D) 9%

Explanation:

Simple interest formula:

`I = P*r*t`

• Principal (P) -> $2,500
• interest rate (r) -> r
• time (t) -> 1 year

Thus:

`225 = 2,500*r*1`

After clearing the equation:

`r = (9)/(100)`, which is 0.09 -> 9%