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You deposit $600 in a savings account in your bank for a year. By the end of the year the value of your deposits increases to $625. What is the interest rate that your bank is offering on the savings account

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Remzwisdom

Answer:

Interest Rate(R) ≅ 4.2%

Explanation:

Principal(P)=$600

Simple interest(SI)=Total amount-principal=$625-$600

                                                                     SI =$25

Rate=R%

Time(T)=1 year

Recall the formula for simple interest;

[tex]SI=\frac{P *R*T}{100}[/tex]

Making Rate the subject of formula, since we are looking for the interest rate;

[tex]R=\frac{SI*100}{P*T}[/tex]

[tex]R=\frac{25*100}{600*1}\\\\R=\frac{2500}{600}[/tex]

Interest Rate(R) ≅ 4.2%

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