Question

Xavier opened a savings account with a deposit of $12,000. the account earned simple interest. he did not make any additional deposits or withdrawals. at the end of 3 years, the account balance was $12,324. what is the annual interest rate on this account?

Answer 1

The annual interest rate on this account opened by Xavier will be 0.9%.

How to calculate the interest rate?

From the information, the following can be deduced:

Principal = $12000

Interest = $12324 - $12000 = $324

Time = 3

We'll use the formula:

I = PRT/100

324 = (12000 × R × 3)/100

32400 = 36000R

R = 32400/36000

R = 0.9

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