2. investments terry invested $2,200 in the stock market for 2 years. if the investment earned 12% simple…
2. investments terry invested $2,200 in the stock market for 2 years. if the investment earned 12% simple interest, how much money did terry earn in interest in 2 years? 4. inheritance kelli rae’s inheritance from her great - grandmother was $220,000 after taxes. if kelli rae invests this money in a savings account that earns $18,260 in simple interest every year, what is the interest rate on her account?
Answer
Explanation:
Step1: Recall simple - interest formula
The simple - interest formula is $I = Prt$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years.
Step2: Solve for Terry's interest
Given $P=$2200$, $r = 0.12$ (since $12%=0.12$), and $t = 2$ years. Substitute into the formula: $I=Prt=2200\times0.12\times2$. First, $2200\times0.12 = 264$, then $264\times2=528$.
Step3: Solve for Kelli Rae's interest rate
Given $I = 18260$, $P = 220000$, and $t = 1$ year. From $I = Prt$, we can solve for $r$. Since $t = 1$, the formula becomes $r=\frac{I}{P}$. Substitute the values: $r=\frac{18260}{220000}=0.083$. To convert to a percentage, multiply by 100: $0.083\times100 = 8.3%$.
Answer:
Terry earned $$528$ in interest. The interest rate on Kelli Rae's account is $8.3%$.