Question

you put $350 in an account. The account earns $17.50 in simple interest in 2.5 years. what is the annual interest rate

Answer 1

Set up a proportion:

17.50                x
--------             --------
2.5 years            1 year

Cross multiply, 17.50 x 1 year = 17.50
    2.5 x x= 2.5 x
 Now divide:   17.50 divided by 2.5x is 7. So the annual interest rate per year is 7$. Remember that I said PER YEAR!

Hope this helps!

Answer 2

The annual interest rate of the simple interest is 2%

How to determine the annual interest rate?

The given parameters are:

• Principal, P = 350
• Time, T = 2.5 years
• Interest, I = 17.50

Simple interest is calculated using:

I = PRT

So, we have:

17.50 = 350 * R * 2.5

Evaluate the product

17.50 = 875 * R

Divide both sides by 875

R = 2%

Hence, the annual interest rate is 2%

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