Calculating Simple Interest Rate on a $2,000 Savings Account

So the 73.93 is not the product of 0.02% and 2000.In summary, Dylan received a $2,000 academic achievement prize from his college, which he deposited into a savings account on July 15, 2016. When he withdrew the money on March 29, 2017, the interest accumulated was $73.93. To calculate the annual rate of simple interest, we can use the formula r=I/pt, where p is the principal amount, I is the interest, and t is the time in years. Plugging in the given values, we get r=73.93/2000*(257/365)=0.2846, which is equivalent to
  • #1
lil.l3b91
4
0

Homework Statement


Dylan received an academic achievement prize of $2,000 from his college. He deposited this money into a savings account on July 15, 2016. If the interest accumulated on the investment when he withdraws the money on March 29, 2017 was $73.93, calculate the annual rate of simple interest that the savings account was providing him.

Round to two decimal places

Homework Equations



r=I/pt
I=prt

The Attempt at a Solution


p=2000
I=73.93
t=257/365

73.93/2000*257/365
73.93/2000*(0.70410959)\
73.93/1,408.219180
=19,04800728
0.02%?
 
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  • #2
It is useful to put brackets around denominators, otherwise expressions like a/b*c are interpreted as (a/b)*c instead of a/(b*c) as you used it here.

It looks fine up to the third line from the bottom. What does the 19,... do there? And where does the 0.02% come from?
0.02% of $2000 is less than a dollar. Clearly within less than a year you can’t get more than 70 dollars interest that way.
 

1. How do I calculate the simple interest rate on a $2,000 savings account?

To calculate the simple interest rate on a $2,000 savings account, you will need to know the annual interest rate and the amount of time (in years) that the money will be invested. The formula for calculating simple interest is: Interest = Principal (amount invested) x Annual Interest Rate x Time (in years).

2. What is a reasonable annual interest rate for a $2,000 savings account?

The annual interest rate for a $2,000 savings account can vary depending on the bank or financial institution. Generally, it is recommended to look for a savings account with an interest rate of at least 1-2% to ensure a decent return on your investment.

3. How often is interest compounded on a $2,000 savings account?

The frequency of compounding interest on a $2,000 savings account will depend on the specific account and its terms and conditions. It is important to read the fine print and ask your bank or financial institution about the frequency of compounding interest before opening an account.

4. Can I make deposits and withdrawals from a $2,000 savings account while earning interest?

Yes, you can make deposits and withdrawals from a $2,000 savings account while earning interest. However, be aware that withdrawing money from the account may affect the total interest earned, as the interest is based on the amount of money in the account at any given time.

5. Is simple interest the only type of interest that can be earned on a $2,000 savings account?

No, there are other types of interest that can be earned on a $2,000 savings account, such as compound interest. Unlike simple interest, compound interest is calculated on the initial amount invested as well as any accumulated interest. It is important to understand the type of interest being earned on your savings account and how it is calculated.

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