Abby opened an account with a deposit of 3,000. She did not make any additional deposits or withdrawals. The account earns simple annual interest. At the end of 8 years, the balance of the account was 3,600. What was the annual interest rate on this account?

Solution

Abby opened an account with a deposit of 3, 000. She did not make any additional deposits or withdrawals. The account earns simple annual interest. At the end of 8 years, the balance of the account was 3, 600. What was the annual interest rate on this account?

Solution

Rate : 2.5%

Solution steps

Translate the problem into an equation:

3600 = 3000 (1 + r \cdot 8)

Solve for

r, 3600 = 3000 (1 + r \cdot 8) : r = 2.5%

Rate : 2.5%

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