Amanda invested $9000 in a fund for 5 years and was paid simple interest. The total interest that she received on the investment was $1800. As a percentage, what was the annual interest rate of her investment?
Question
Amanda invested 1800. As a percentage, what was the annual interest rate of her investment?
Solution
To find the annual interest rate, we can use the formula for simple interest which is I = PRT, where I is the interest, P is the principal amount (the initial amount of money), R is the rate of interest per year, and T is the time the money is invested for in years.
In this case, we know that: I = 9000 (the initial amount Amanda invested) T = 5 years (the time Amanda's money was invested for)
We want to find R (the annual interest rate). We can rearrange the formula to solve for R:
R = I / (PT)
Substituting the known values:
R = 9000 * 5)
R = 45000
R = 0.04
To express R as a percentage, we multiply by 100:
R = 0.04 * 100 = 4%
So, the annual interest rate of Amanda's investment was 4%.
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