Tim put $275 in the bank one year ago and forgot about it.Today,the bank sent Tim a statement indicating that he now has $294.25 in his account.What interest rate did Tim earn?
A)5 percent
B)6 percent
C)7 percent
D)8 percent

Question

Quizplus · Accepted Answer

To find out the interest rate, we can use the simple interest formula:

I = P*r*t

Where:
I = Interest earned
P = Principal (initial amount)
r = Interest rate (unknown)
t = Time period (1 year)

We know that the initial amount (P) was $275 and the final amount (P+I) is $294.25, which means that the interest earned (I) is:

I = $294.25 - $275 = $19.25

Substituting these values into the formula, we get:

$19.25 = $275 * r * 1

Solving for r, we get:

r = $19.25 / $275 = 0.07 or 7%

Therefore, Tim earned a 7% interest rate. The answer is C.

Tim Put $275 in the Bank One Year Ago and Forgot