Question

my final balance afrer 48 months was $896.00 if i originally put $800.00 into the bank what was the interset rate

Answer 1

The formula in computing the maturity value of a savings with a simple interest rate is:

MV = P (1 + rt)

Where: MV = maturity value after certain years

                P = principal amount

                r = interest rate

                t = time in years

If you would manipulate the formula to solve for r in terms of the other variables, you will get this formula:

1 + rt = MV/P

rt = MV/P – 1

r = (MV/P – 1)/t

Substituting the given amounts to the formula:

r = ($896/$800 – 1)/4

r = (1.12 – 1)/4

r = 0.12/4

r = .03 or 3%

Note: The 48 months is equivalent to 4 years (48/12 = 4)