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Taylor opened a savings account with $425. After 2 years, the total interest earned was $10.20. What was the annual interest rate?

Sagot :

Lanuel

Answer:

R = 1.2%

Step-by-step explanation:

Given the following data;

Principal = 425

Time = 2

Simple interest = 10.20

To find the annual interest rate;

Mathematically, simple interest is calculated using this formula;

[tex] S.I = \frac {PRT}{100} [/tex]

Where;

  • S.I is simple interest.
  • P is the principal.
  • R is the interest rate.
  • T is the time.

Substituting into the equation, we have;

[tex] 10.20 = \frac {425*R*2}{100} [/tex]

[tex] 10.20 = \frac {850R}{100} [/tex]

Cross-multiplying, we have;

[tex] 1020 = 850R [/tex]

[tex] R = \frac {1020}{850} [/tex]

R = 1.2%

Therefore, the annual interest rate is 1.2 percent.

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