Question

Malik invests money in an account paying simple interest. He invests $80 and no money is added or removed from the investment. After one year, he has $83.20. What is the simple percent interest per year?

Answer 1

4%

Explanation:

The interest earned on the investment is the difference between the end-of-year value and the initial value:

$83.20 -80 = $3.20 . . . . simple interest per year

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The interest rate is the ratio of this to the initial investment:

$3.20/$80.00 = 0.04 = 4% . . . . . simple interest rate per year