Mai invested 500 in a fund for 3 years and was paid simple interest. The total interest that she received on the investment was 60 . As a percentage, what was the annual interest rate of her investment?

Solution

M ai in v es t e d 500 in a f u n d f or 3 ye a rs an d w a s p ai d s im pl e in t eres t . T h e t o t a l in t eres t t ha t s h e rece i v e d o n t h e in v es t m e n t w a s 60 . A s a p erce n t a g e, w ha t w a s t h e ann u a l in t eres t r a t e o f h er in v es t m e n t ?

Rate : (- 29.33333 \dots %)

Solution steps

Translate the problem into an equation:

60 = 500 (1 + r \cdot 3)

Solve for

r, 60 = 500 (1 + r \cdot 3) : r = - 29.33333 \dots %

Rate : (- 29.33333 \dots %)