Question

Joannie invests $1000 is a saving account. After 5 years it has earned $175 simple interest. What was the annual interest rate she earned on her money? A. 1.75% B. 3.5% C. 0.35% D. 35%

Answer 1

Her annual interest rate is 3.5% (Choice B)

Explanation:

Using interest formula, `I=p*r*t` or
Interest = Principal (Initial Amount) x Interest Rate x Time,
we know that her annual interest rate is 3.5%

To do this, first input the known values: `175 = 1000*r*5`

Next, simplify the equation by multiplying 5 and 1000:
`175 = 5000*r`

Then, solve for the rate (r) by dividing 175 (interest) by 5000:

`175/5000 = r`

`r = 0.035`

Finally, convert 0.035 to a percentage to get the annual interest rate by moving the decimal point two places to the right:

`r = 3.5%`