Answer:
1. c. $450.
2. 22%
Step-by-step explanation:
1. We will use simple interest formula to find the amount of interest after 2 years on $5,000. As interest is not compounded, so it will not matter if she moves the simple interest earned in separate account or not.
, where,
I= Amount of interest.
P= Principal amount.
r= Interest rate in decimal form.
t= Time in years.
![4.5\text{ percent}=\frac{4.5}{100}=0.045](https://tex.z-dn.net/?f=4.5%5Ctext%7B%20percent%7D%3D%5Cfrac%7B4.5%7D%7B100%7D%3D0.045)
Upon substituting our given values in above formula we will get,
![I=5000*0.045*2](https://tex.z-dn.net/?f=I%3D5000%2A0.045%2A2)
![I=450](https://tex.z-dn.net/?f=I%3D450)
Therefore, Tracy will get an amount of $450 as simple interest after 2 years and option c is the correct choice.
2. Sylvia bought a 6-month $1900 certificate of deposit. At the end of 6 months, she received a $209 simple interest.
6 months is same as 1/2 year.
Upon substituting our given values in above formula we will get,
![r=\frac{209}{950}](https://tex.z-dn.net/?f=r%3D%5Cfrac%7B209%7D%7B950%7D)
Since interest rate is in decimal form, let us convert it in percent.
![\text{Interest rate}=0.22\times 100=22\text{ percent}](https://tex.z-dn.net/?f=%5Ctext%7BInterest%20rate%7D%3D0.22%5Ctimes%20100%3D22%5Ctext%7B%20percent%7D)
Therefore, interest rate of certificate of deposit was 22%.