Question

1.) (7.RP.3) Tracy started a savings account that is set up so that the simple interest earned on the investment is moved into a separate account at the end of each year. Tracy invests $5,000 at 4.5%, what is the total simple interest accumulated in the checking account after 2 years? Show your work. *
$4.50









$45









$450









$4,500









$45,000

2. (7.RP.3) Sylvia bought a 6-month $1900 certificate of deposit. At the end of 6 months, she received a $209 simple interest. What rate of interest did the certificate pay? *

Answer 1

Answer:

The total simple interest accumulated in the separate checking account after two years is $450.  The rate of interest on the 6-month certificate of deposit was 22%.

Step-by-step explanation:

The general formula for calculating simple interest is as follows:  A=P(1+rt), where 'A'=the total amount; 'P'=the principal amount; 'r'=rate; 't'=time, in years. Given that the simple interest is moved into a separate account at the end of each year, you just need to calculate the amount of interest collected on the principal amount of $5000 after each year at a rate of 4.5%.  Putting these values into the equation and solving for 'A' gives you a value of $5225, or $225 per year which is $450 over two years.  In order to find the rate in the second problem, use the same formula, substituting $1900 for 'P', $2109 for 'A' and 0.5 for 't', in order to solve for 'r' which will be 22%.