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9 October, 06:35

After 6 years, Federico earned $1485 in simple interest from a CD into which he initially deposited $9000. What was the annual interest rate of the CD?

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  1. 9 October, 07:31
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    The simple interest I has the formula of

    I=Prn

    where P = principal value, r = interest rate, n = no. of period (years)

    For r,

    r = I / (Pn) = 1485 / (9000*6) = 0.0275 = 2.75%
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