Gabe placed $2000 in a certificate of deposit. He earned $10 in interest each month for the next 36 months. Find the annual simple interest rate for his certificate of deposit.
(10 * 12) / 2000 = 0.06 = 6%
Ms. Sue - Thank you so much! I'm a 3rd grade teacher/mom who has NO CLUE what to do in 7th grade pre-algebra! My son says thank you for verifying his answer and thought process.
You are very welcome. :-)
Is there any you can help us with either of the other 2 problems I posted about interest?
I'm not sure about those. I was a middle school social studies and English teacher. But a math tutor will probably answer your other questions.
Where do you get 12 from?
To find the annual simple interest rate for Gabe's certificate of deposit, we need to calculate the total interest earned over the 36-month period and then convert it to an annual rate.
First, let's calculate the total interest earned. We are given that Gabe earned $10 in interest each month for 36 months. Therefore, the total interest earned is $10/month * 36 months = $360.
To find the annual rate, we divide the total interest earned by the initial principal (the amount Gabe placed in the certificate of deposit). In this case, the initial principal is $2000.
Annual interest rate = Total interest earned / Initial principal
Annual interest rate = $360 / $2000
Now, divide $360 by $2000:
Annual interest rate = 0.18 or 18%
So, the annual simple interest rate for Gabe's certificate of deposit is 18%.