Ozzie put $15,000 into an account with a fixed rate two years ago and now has $16,224.00.What rate of interest did Ozzie earn?
A)2 percent
B)3 percent
C)4 percent
D)6 percent

Question

Quizplus · Accepted Answer

To find the rate of interest, we can use the formula:

A = P(1 + r)^t
where A is the final amount, P is the principal, r is the interest rate, and t is the time in years.

Plugging in the given values, we get:
16,224.00 = 15,000(1 + r)^2

Simplifying and solving for r, we get:
1 + r = sqrt(16,224.00 / 15,000) = 1.08
r = 1.08 - 1 = 0.08 = 8%

Therefore, Ozzie earned a fixed rate of 8% over two years, which is equivalent to a yearly rate of 4%. The closest choice to this rate is C, which is 4%, so the answer is C.

Ozzie Put $15,000 into an Account with a Fixed Rate