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?

Question

Halle Shelton

Mathematics

12 July, 06:20

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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Answers (1)

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Shea Parker · Answer 1

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%