Question

Jerome deposited $8,000 into a new retirement account with a simple interest rate of 2.8%. If account has earned $3,808 in interest, and there have been no deposits or withdraws, how many years ago did he open the account?

Answer 1

Jerome opened the account 17 years ago

Solution:

Jerome deposited $8,000 into a new retirement account with a simple interest rate of 2.8%

Therefore,

Principal = $ 8000

Rate of interest = 2.8 %

The account has earned $3,808 in interest

Simple interest earned = $ 3808

The formula for simple interest is given as:

`\text{ Simple interest} = (p * n * r)/(100)`

Where,

"p" is the principal and "n" is the number of years and "r" is the rate of interest

Substituting the known values,

`3808 = (8000 * n * 2.8)/(100)\\\\3808 = 80 * n * 2.8\\\\3808 = 224 * n\\\\n = (3808)/(224)\\\\n = 17`

Thus he opened the account 17 years ago