Question

You deposit $2,000 in an account. The account earns $600 simple interest in 8 years.

What is the annual interest rate? Round your answer to the nearest whole percent.

Answer 1

4%

Explanation:

we know that

The simple interest formula is equal to

`I=P(rt)`

where

I is the Final Interest 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=8\ years\\ P=\$2,000\\ I=\$600\\r=?`

substitute in the formula above

`600=2,000(8r)`

solve for r

`600=16,000(r)`

`r=600/16,000`

`r=0.0375`

Convert to percent

`r=0.0375*100=3.75\%`

Round to the nearest whole percent

4%