Alan saved $50,000 for 10 tens years. He earned $25,000 interest from his savings account. what was his bank interest rate:
A. 20% B. 200% C. 5% D. 0.05%
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I'll assume it's compound. :)
When the interest is compounded once a year:
A = P(1 + r)n
P is the principal (the initial amount you borrow or deposit)
r is the annual rate of interest (percentage)
n is the number of years the amount is deposited or borrowed for.
A is the amount of money accumulated after n years, including interest.
1.5 = (1+r)^10
Solving for r, we get r=0.041379...
so the rate is roughly 4.14% :)