What annual simple interest rate would be needed for $55,000 to grow to $60,000 over a term of 295 days?
A) 12.34%
B) 10.31%
C) 11.25%
D) 9.09%
E) 8.33%

Question

Quizplus · Accepted Answer

Simple interest = (P * R * T) / 100Where,P = Principal amount = $55,000R = Annual simple interest rate (in %)T = Time period = 295 daysWe need to find the value of R.R = (Simple interest * 100) / (P * T)= ((60,000 - 55,000) * 100) / (55,000 * 295)= (5,000 * 100) / (55,000 * 295)= 500,000 / 16,225= 30.82%However, the question asks for the annual simple interest rate, so we need to divide the result by 365 (the number of days in a year).R = 30.82% / 365= 0.0844= 8.44%Therefore, the annual simple interest rate would be needed for $55,000 to grow to $60,000 over a term of 295 days is 8.44%, which is closest to option C) 11.25%.

What Annual Simple Interest Rate Would Be Needed for $55,000