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.

Answer 1

3.2%

Explanation:

Step one:

given data

principal P= $1800

time t= 1 year

Final amount A=1857.60

rate r=?

Step two:

we are expected to solve for the rate, let assume the investment is a simple interest type.

A=P(1+rt)

solve for r we can substitute our data

1857.60=1800(1+r*1)

1857.60=1800+1800r

1857.60-1800=1800r

57.6=1800r

r=57.6/1800

r=0.032

0.032*100= 3.2%

This shows that the rate is 3.2%