Question

Loretta invested $1000 in a simple interest account yielding 5% paid annually. In 2 years, she will have $1100 in her account. From this example, we can conclude that 5% represents the:

Answer 1

Periodic interest rate.

Answer 2

Answer:

5% represents the rate of interest per annum.

Step-by-step explanation:

It is given Loretta invested $1000 in simple interest account yeilding 5% paid annually and amount in her account after 2 years is $1100 that is she earned 1100-1000=$100 interest in 2 years.

Simple interest can be calulated by the formula S.I=P T R

P represntes the principal ,T = time ,R= rate of interest .

P=$1000,T= 2 years ,R= 5%=0.05.

S.I = 1000(2)(0.05)

S.I= 100

Interest earned is $100 on an investement of $1000 for 2 years at the rate of interest of 5% annually.