After 4 years, $40,500 deposited in a savings account with simple interest had grown to a total of $42,120. What was the interest rate?
Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.
Answer options:
A) 0.005%
B) 0.1%
C) 0.05%
D) 0.2%
To find the interest rate, we can use the formula for simple interest:
[ i = p cdot r cdot t ]
First, we need to determine the interest earned ( i ).
1. Calculate the interest earned:
[
i = text{Total amount} – text{Principal} = 42,120 – 40,500 = 1,620
]
2. Plug in the values into the formula:
– ( p = 40,500 )
– ( t = 4 )
– ( i = 1,620 )
The formula becomes:
[
1,620 = 40,500 cdot r cdot 4
]
3. Solve for ( r ):
[
1,620 = 162,000 cdot r
]
[
r = frac{1,620}{162,000} = 0.01
]
4. Convert to percentage:
[
r = 0.01 times 100 = 1%
]
However, let’s check the given options, as they seem to be between 0% and 1%. A closer calculation shows an error in my description of the options; the interest calculated could relate to a misunderstanding of the options provided.
To calculate again correctly