Question

Brody deposited 8,001 in a savings account with simple interest. Four months later the account held 8,267.70. What is the interest rate?

Answer 1

Answer:

R = 0.8333%/month

(R = 9.9996%/year)

Equation:

r = (1/t)(A/P - 1)

Calculation:

Solving your equation:

r = (1/4)((8267.7/8001) - 1) = 0.00833333

r = 0.00833333

Converting r decimal to R a percentage

R = 0.00833333 * 100 = 0.8333%/month

Calculating the annual rate

0.8333%/month × 12 months/year = 9.9996%/year.

The interest rate required to get a total amount, principal plus interest, of $8,267.70 from simple interest on a principal of $8,001.00 over 0.333333 years (4 months) is 0.8333% per month.