Question

pam deposited $6,900 in a savings account with simple interest. Four months later she had earned $23 in interest. What was the interest rate?

Answer 1

Answer:

1%

Step-by-step explanation:

We use the simple interest equation of A=P(1+rt).

A-the total amount with interest earned

P-the initial amount or principal

r-rate

t-time in years

We substitute the values P=6900, A=6923, and t=0.33 since 4 months divided by 12 months is 0.333 years. We then solve for r.

$6923=6900(1+r(0.33))\\6923=6900(1+0.33r)\\\frac{6923}{6900} =\frac{6900(1+0.33r)}{6900} \\1.0033=1+0.33r\\1.0033-1=1-1+0.33r\\0.0033=0.33r$

Our final step is to divide both sides by 0.33.

$\frac{0.0033}{0.33} =\frac{0.33r}{0.33} \\0.01=r$

This is the decimal of the rate. We convert to a percentage by multiplying by 100. 0.01(100)=1%.