A bank offers simple interest on a certificate of deposit. Jaime invests $500 and after one year earns $40 in interest. What was the interest rate on the certificate of deposit?
1 Answer
Jun 30, 2018
Explanation:
#"simple interest (I) is calculated using"#
#I=PRT#
#"where P is the principal, R the rate of interest and T time"#
#"in years"#
#"here "I=40, P=500 , R=? and T=1#
#"rearrange the formula to solve for R"#
#R=I/(PT)#
#color(white)(R)=40/(500xx1)=cancel(40)^4/cancel(500)^(50)=4/50=2/25#
#R=2/25xx100%=2/cancel(25)^1xxcancel(100)^4=8%#
