9514 1404 393
Answer:
4%
Step-by-step explanation:
We assume the interest earned is simple interest, because that make the numbers come out "nice."
The account balance is given by ...
A = P(1 +rt) . . . . principal P earns simple interest at annual rate r for t years
1080 = 1000(1 +r·2) . . . . fill in the given values
1.08 = 1 +2r . . . . . . . . . . divide by 1000
0.08 = 2r . . . . . . . . . . . subtract 1
0.04 = r = 4% . . . . . . . divide by 2
The annual interest rate is 4%.
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<em>Additional comment</em>
If interest is compounded annually, the annual rate is about 3.92%. If it is compounded continuously, the rate is about 3.85%.
