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6 July, 11:37

Maggie has $14,100 to invest, and wishes to gain $4,000 in interest over the next eight years. Approximately what is the minimum simple interest rate Maggie needs to reach her goal?

a. 289%

b. 35596

c. 4.95%

d. 5.18%

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Answers (2)
  1. 6 July, 12:48
    0
    Answer: 3.55% per year

    Step-by-step explanation:

    Interest at a simple rate is

    I = P*r*t, where P is the principal, the money to be investes; r is the rate and t is the time of the investment.

    Maggie's case, we have:

    P = 14100

    I = 4000

    r = ?

    t = 8

    (as we are using t in years, the rate will be in years)

    I = P*r*t

    4000 = 14100. r. 8

    4000 = 112800. r

    r = 4000/112800

    r = 0.0354 = 3.55%
  2. 6 July, 15:14
    0
    The answer is D. 5.18% each year delivers $4050.34 in return

    Year 1: Investment*rate = return

    Year 2: (Return + previous year investment) * Rate = return in year 2

    and so on for 5 years.
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