Question

1.) (7.RP.3) Tracy started a savings account that is set up so that the simple interest earned on the investment is moved into a separate account at the end of each year. Tracy invests $5,000 at 4.5%, what is the total simple interest accumulated in the checking account after 2 years? (1 pt) *

a) $4.50
b) $45
c) $450
d) $4,500
e) $45,000
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2. 2. (7.RP.3) Sylvia bought a 6-month $1900 certificate of deposit. At the end of 6 months, she received a $209 simple interest. What rate of interest did the certificate pay? Show all of your work.

Answer 1

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.

`I=P*r*t`, where,

I= Amount of interest.

P= Principal amount.

r= Interest rate in decimal form.

t= Time in years.

`4.5\text{ percent}=(4.5)/(100)=0.045`

Upon substituting our given values in above formula we will get,

`I=5000*0.045*2`

`I=5000*0.09`

`I=450`

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.

`I=P*r*t`

Upon substituting our given values in above formula we will get,

`209=1900*r*(1)/(2)`

`209=950*r`

`r=(209)/(950)`

`r=0.22`

Since interest rate is in decimal form, let us convert it in percent.

`\text{Interest rate}=0.22* 100=22\text{ percent}`

Therefore, interest rate of certificate of deposit was 22%.