Question

You put $5000 in an account. The account earns $2250 simple interest in 10 years. What is the annual interest rate?

Answer 1

Answer:

4.5%.

Step-by-step explanation:

We have been given that you put $5000 in an account. The account earns $2250 simple interest in 10 years.

To find the annual interest rate we will use simple interest formula.

$I=Prt$, where,

I = Amount of interest after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

Upon substituting our given values in simple interest formula we will get,

$2250=5000r*10)$

$2250=50000r$

Let us divide both sides of our equation by 50000.

$\frac{2250}{50000}=\frac{50000r}{50000}$

$0.045=r$

Let us multiply our rate by 100 to get our annual interest rate as percentage.

$0.045\times 100=4.5\%$

Therefore, the annual interest rate is 4.5%.

Answer 2

You use the equation A=P(1+rt) and sub in the numbers.