Question

Kenji had $7,632.18 in a savings account with simple interest. He had opened the account with $7,002 exactly 3 years earlier. What was the interest rate?

Answer 1

Rate =3%

Explanation:

The formula for Amount in the account at Simple Interest is given by:

Amount = Principal + Simple Interest

Where: [TeX] Simple \: Interest= \frac{Principal X Rate X Time}{100}[/TeX]

Principal = $7,002

Amount=$7,632.18

Simple Interest =$7,632.18-$7,002=$630.18

Time = 3 Years

[TeX] Simple \: Interest= \frac{Principal X Rate X Time}{100}[/TeX]

[TeX] 630.18= \frac{7,002 X Rate X 3}{100}[/TeX]

630.18 X 100 =21006 X Rate

63018=21006 X Rate

Rate = 63018/21006 =3%

The rate is 3%

Answer 2

The interest rate charged is 3%

Explanation:

In this question, we are asked to calculate the rate charged on an amount which yielded an amount after 3 years , if this interest was computed as simple interest.

Mathematically, the formula for simple interest I is as follows;

I = PRT/100

Where I is the simple interest, P is the initial amount saved, R is the rate with T as the time

In the question, we identify the values as follows;

P = $7,002

R = ?

T = 3 years

I = 7632.18 - 7,002 = 630.18

We input the values ;

630.18 = (7002 * R * 3)/100

100 * 630.18 = 21006R

21006R = 63018

R = 63018/21006

R = 3%