Question

Li deposited $17,500 into a bank account that earned simple interest each year. After 2 years, he had earned $2975 in interest.

No money was deposited into or withdrawn from the account.

What was the annual interest rate?

Enter your answer in the box.

Answer 1

Answer: 8.5%

Explanation:

Formula : Simple interest = (Principal) x (annual interest rate) x (Time) (i)

Given: Principal : P = $ 17,500

Time : 2 years

Simple interest : I = $ 2975

Let r = annual

`2975=17500*(r)*(2)`

`\Rightarrow\ r=(2975)/(17500*2)\\\\\Rightarrow\ r=0.085\\\\\Rightarrow\ r=0.085*100\\\\\Rightarrow\ r=8.5\%`

Hence, The annual interest rate was 8.5%.