Question

Mason currently has a balance of $1,637.10 in an account he has held for 21 years. He opened the account with an initial deposit of $900. What is the simple interest on the account?

Answer 1

The interest rate on Mason's account is 3.9%

Explanation:

1. Let's review the information provided to us to answer the question correctly:

Mason's account balance after 21 years = $ 1,637.10

Initial deposit = $ 900

Time of the investment = 21 years

2. What is the simple interest on the account?

Let's use the simple interest formula, this way:

FV = P * (1 + rt)

FV = Future Value P = Initial deposit

r = Interest rate t = time of the investment

Replacing with the real values, we have:

1,637.10 = 900 + (1 + 21r)

1,637.10 = 900 + 18,900r

18,900r = 1,637.10 - 900

18,900r = 737.10

r = 737.10/18,900

r = 0.039

The interest rate on Mason's account is 3.9%