Mathematics
princessanna
36

Li deposited $17,500 into a bank account that earned simple interest each year. After 2 years, he had earned $2975 in interest. If no money was deposited into or withdrawn from the account, what was the annual interest rate?

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(1) Answers
Brumbaugh991

R = 8.5%/year Equation: r = (1/t)(A/P - 1) Calculation: Solving our equation r = (1/2)((20475/17500) - 1) = 0.085 r = 0.085 converting r decimal to a percentage R = 0.085 * 100 = 8.5%/year The interest rate required to get a total amount, principal plus interest, of $ 20,475.00 from simple interest on a principal of $ 17,500.00 over 2 years is 8.5% per year.

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