You put $100 in an account. The account earns $2 simple interest in 6 months. What is the annual interest rate?
Mathematics · College · Tue Nov 03 2020
Answered on
Well we know that the account earns $2 in 6 months. We need to find out how many does the account earn in 1 year or in 12 months. Lets create a simple ratio and the annual rate will call it X.
If in 6 months the account earns $2.
Then in 12 months the account will earn $x.
Cross multiply, 6 times x equal to 12 times 2.
6x=12*2
6x=24
Divide both sides with 6.
6x/6 = 24/6
x=$4