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Megan Hughes deposits $3,500 in an account that pays simple interest. When she withdraws her money 6 months later, she receives $3,692.50. What rate of interest did the account pay? Round to the nearest whole percentOA 13% per yearOB 10% per yearOC 12% per yearOD 115 per year

Answer :

We are given the following information

Deposited amount = $3,500

Final amount = $3,692.50

Number of years = 6/12 = 0.5

We are asked to find out what interest did the account pay?

Recall that the simple interest formula is given by

[tex]A=P(1+rt)[/tex]

Let us substitute all the known values and solve for interest rate (r)

[tex]\begin{gathered} 3,692.50=3,500(1+0.5r) \\ \frac{3,692.50}{3,500}=1+0.5r \\ 1.055=1+0.5r \\ 0.5r=1.055-1 \\ 0.5r=0.055 \\ r=\frac{0.055}{0.5} \\ r=0.11\times100\% \\ r=11\% \end{gathered}[/tex]

Therefore, the interest rate is 11% per year.

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