Question

Bianca deposited $1500 into asavings account for whichsimple interest is calculatedquarterly. If her $1500 grew to$1509 after 3 months, what isthe yearly interest rate onBianca's account?

Answer 1

Solution:

Given;

$P=1500,A=1509,t=3months=0.25year$$\begin{gathered} A=P(1+\frac{r}{4})^{4t} \\ \\ 1509=1500(1+\frac{r}{4})^{4(0.25)} \\ \\ \frac{1509}{1500}=1+\frac{r}{4} \\ \\ 1.006-1=\frac{r}{4} \\ \\ r=4(0.006) \\ \\ r=0.024 \end{gathered}$

Thus, the yearly interest rate on Bianca's account is 2.4%