Interest of $22.05 was earned in three months on a balance of $1960. What is the interest rate per annum earned on that account?
P.s please explain how you solved it.
annual interest = 4*22.05=88.20
$1960 earns 88.20 interest in one year, so annual interest,
i=88.05/1960=0.045, or 4.5% per annum
To find the interest rate per annum earned on the account, we can use the formula:
Interest = (Principal * Rate * Time) / 100
Where:
Interest is the amount of interest earned,
Principal is the starting balance,
Rate is the interest rate per annum, and
Time is the time period in years.
In this case, we have:
Interest = $22.05,
Principal = $1960, and
Time = 3 months, or 3/12 = 0.25 years.
Substituting these values into the formula, we can solve for the interest rate:
$22.05 = ($1960 * Rate * 0.25) / 100
To isolate the rate, we can rearrange the equation as follows:
Rate = ($22.05 * 100) / ($1960 * 0.25)
Now we can calculate the interest rate:
Rate = ($22.05 * 100) / ($1960 * 0.25)
≈ 0.05639
Therefore, the interest rate per annum earned on the account is approximately 5.639%.
Note: In the calculations, we used the percentage form of the interest rate.
To find the interest rate per annum, we can use the formula:
Interest = Principal × Rate × Time
Given that the interest earned is $22.05, the principal is $1960, and the time is 3 months, we can plug these values into the formula and solve for the rate:
$22.05 = $1960 × Rate × (3/12)
To simplify, we divide both sides of the equation by $1960:
22.05/1960 = Rate × (3/12)
0.01125 = Rate × 0.25
Now, we solve for the rate by dividing both sides by 0.25:
0.01125 / 0.25 = Rate
Rate = 0.045 = 4.5%
Therefore, the interest rate per annum earned on that account is 4.5%.
To solve this problem, I used the formula for simple interest and rearranged it to solve for the rate. I divided the interest by the principal to get the rate per 3 months, and then multiplied it by 4 to find the annual rate.