Jay's bank account listed a balance of $3,667.50. He originally opened the account with a $3,070 deposit 2 1/4 years ago. If there were no deposits or withdrawals, what was the simple interest rate (to the nearest hundredth of a percent)?
1 Answer
See below.
Explanation:
If you just want the percentage of the total interest after 2.25 years.
We started with 100%, this was our $3070.
The amount extra is:
Below is a more realistic answer, since interest is calculated at specified periods. Often monthly, quarterly or yearly.
The amount of interest after 2.25 years is:
We can use the formula for compound interest, with 1 compound per year.
Where:
Our future value is what we have now. $3667.50
Our principal value is what we started with $3070.00
Compounding period is
Time is 2.25 years.
We need to find
Putting in our known values:
Divide by 3070:
Taking logarithms of both sides:
Divide by 2.25:
Using the laws of logarithms:
Using this idea. Raise
This is in decimal form, so multiplying by 100.