Question

Benson purchased a $1,800 certificate of deposit that earns simple annual interest. At the end of 1 year, the certificate was worth $1,857.60.

What is the annual interest rate on this certificate of deposit?

Answer 1

3.2%

Explanation:

Here, we want to calculate the annual interest rate

The interest is = Amount - principal = 1857.60 - 1800 = 57.60

‘Mathematically;

Interest = PRT/100

P is 1,800

r is rate

t is time = 1

57.60 = (1800 * r * 1)/100

100 * 57.60 = 1800r

r = 5760/1800

r = 3.2%