Question

If a person has $1,000 in a savings account and earns $20 a year in interest on that account, the rate of return on the money is close to _______.A.) 5%B.) 2%C.) 10%D.) 20%

Answer 1

B.) 2%

Step-by-step explanation:

The computation of the rate of return on the money is

= (Interest earned on that account ÷ amount in saving account) × 100

= ($20 ÷ $1,000) × 100

= 2%

We simply divided the interest rate by the amount which is available in the saving amount so that exact return rate on the money can come.

And, multiplied it by 100 as the return rate or any other rate is expressed in percentage form