 |
| ||
| |||
|
| Math Central | Quandaries & Queries |
|
Question from Javier, a student: A business invests $10,000 in a savings account for two years. At the beginning of the second year, and additional $3,500 is invested. At the end of the second year, the account balance is $15,569.75. What was the annual interest rate? |
Javier,
If this is simple interest not compounded and the annual interest rate is r then for a $10,000 investment the interest earned is $10,000 × r each year. Thus in 2 years the balance in the account would be
$10,000 + 2 × $10,000 × r
Add to this the amount added to the account from an investment of $3,500 for 1 year. The sum of these two numbers is $15,569.75. Solve for r.
Penny
| ||
| ||
| ||
 |
 |
|
Math Central is supported by the University of Regina and The Pacific Institute for the Mathematical Sciences.