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11 January, 05:22

Sir Ving Spoon earned $5,436 on his $7,550 certificate of deposit. If he had the CD for 12 years, what simple interest rate did the bank pay him?

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  1. 11 January, 07:20
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    6% or 0.06 is the simple interest rate the bank pays him.

    Step-by-step explanation:

    Sir Ving Spoon earned $5,436 on his $7,550 certificate of deposit.

    From this given information,

    It can be determined that the Principal amount is $7550 and the interest amount is $5436.

    The CD is for 12 years. Therefore, the number of years is 12.

    To find the interest rate (r):

    Using the simple interest formula,

    Interest = P*r*t

    where,

    P is the principal amount = $7550 r is the rate of interest. t is the number of years = 12

    ⇒ 5436 = 7550 * r * 12

    ⇒ 5436 = 90600 * r

    ⇒ r = 5436 / 90600

    ⇒ r = 0.06

    Multiply by 100 to represent in rate %

    ⇒ r = 0.06 * 100

    ⇒ r = 6%

    ∴ 6% or 0.06 is the simple interest rate the bank pays him.
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