Question

22. Find the effective rate of interest to the nearest hundredth percent if $60.94 is earned in one year on a deposit of

$975.

Answer 1

6.25%

Step-by-step explanation:

Interest is calculate using the formula

I= P x R x T

in this case

I= interest, p= $975, r=?? ,t = 1

Therefore:

60.94 = 975 x r x 1

60.94 =975 r/100... we multiply both side by 100 to get rid of the fraction.

6094=975r

r=6094/ 975

r=6.2502

interest rate = 6.25%