What is the simple interest rate of a 7-month GIC that grows from $30,000 to its maturity value of $31,500?
A) 5.00%
B) 8.16%
C) 8.57%
D) 8.95%
E) 9.88%

Question

Quizplus · Accepted Answer

The simple interest rate can be calculated using the formula $I = PRT$, where $I$ is the interest earned, $P$ is the principal amount, $R$ is the rate of interest per time period, and $T$ is the time period. Here, $I = \$31,500 - \$30,000 = \$1,500$, $P = \$30,000$, and $T = \frac{7}{12}$ year (since there are 12 months in a year). Rearranging the formula to solve for $R$, we get $R = \frac{I}{PT}$. Plugging in the values, $R = \frac{\$1,500}{\$30,000 \times \frac{7}{12}}$, which simplifies to $R = 0.0857$ or $8.57\%$.

What Is the Simple Interest Rate of a 7-Month GIC