Mr. Flores opened an account with a deposit of $5,000
The account earned annual simple interest.
He did not make any additional deposits or withdrawals.
At the end of 4 years, the balance of the account was $6,500.
What is the annual interest rate on this account?
A) 5.8%
B) 7.5%
C) 3.3%
D) 1.9%
Whats the answer?
1.9
To find the annual interest rate on Mr. Flores' account, we can use the formula for simple interest:
I = P * r * t
Where:
I = Interest earned
P = Principal (initial deposit)
r = Annual interest rate (in decimal form)
t = Time (in years)
In this case, the initial deposit (principal) is $5,000, the interest earned is $6,500 - $5,000 = $1,500, and the time is 4 years.
Substituting the values into the formula, we get:
$1,500 = $5,000 * r * 4
Now we can solve for the annual interest rate (r):
r = $1,500 / ($5,000 * 4)
r = 0.075
So, the annual interest rate is 0.075 or 7.5% (option B).
Note: I used decimal form for the interest rate in the calculation. If you prefer a percentage, you can multiply the result by 100 to get 7.5%.
well, you know that
5000(1+4r) = 6500
so just find r
6500-5000=1500
1500=5000*r*4
Got the rest?