Use the simple interest formula I=prt, where I is the interest, p the principal, r the annual interest rate, and t the time in years.
C
Practice makes perfect
If we have a savings account, the bank pays us interest for the use of our money. To calculate the interest I, we use the simple interest formula.
I= p r t, where...
I& = Interest
p& = Principal
r& = Annual interest rate
t& = Time (in years)
We know that Mei-Ling invested $2000 in a simple interest account for 3 years. At the end of 3 years, she had earned $ 150 in interest. Let's substitute these values into the simple interest formula. To make the math easier, we will ignore the units.
I= p r t [0.3em] ⇓ [0.3em]
150= 2000* r * 3
Note that we got an equation that can help us to find the simple interest rate of the account. Let's solve this equation for r. To do so, we will use the Division Property of Equality.
We found that r= 0.025 is a solution to the equation. We can write the solution as a percent by moving the decimal point two places to the right and writing the percent symbol.
r=0.025 = 2.5 %
The simple interest rate for the account is 2.5 %, which means that the correct option is C.
