Question

If Kachina Caron invested $2400 in a simple interest account and earned $42 in 3 months, what is the annual interest rate?

Answer 1

Explanation:

Step 1 :

Given that,

The Principal amount invested, P = $2400

The Simple interest earned = $ 42

The period of duration, n = 3 months = 3/12 year

step 2 :

To find the annual interest rate,

Simple interest = Pnr / 100

42 = (2400(3/12)r) / 100

42 = 7200r / (1200)

r = (42*1200) / 7200

r = 50400 / 7200

= 7%

∴ The annual interest rate is 7%

Answer 2

Sixteen point six six six %