Question

Max has $2,000 he would like to invest in an account that pays simple interest. Max would like to earn a total of $650 in interest over the next five years. He does not plan on making any additional deposits of withdrawals to the account. What annual interest rate must Max receive?

Answer 1

Answer: 6.5%

Explanation:

Formula for simple interest : I = Prt , where P= principal , r= rate of interest t= time

As per given , P = $2000 , I=$ 650, t= 5 years

Substitute all theses values in the formula , we get

`650=2000* r*5\\\\\Rightarrow\ r=(650)/(2000*5)\\\\\Rightarrow\ (65)/(1000)\\\\\Rightarrow\ r=0.065 =0.065*100\%=6.5\%`

Hence, the required annual interest = 6.5%