question archive What annual rate of interest was earned if a $19,000 investment for five months earned $708
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What annual rate of interest was earned if a $19,000 investment for five months earned $708.55 in interest?
$708.55 interest is for 5 months. If we want to know the amount of interest for 12 months or for full year then we will proportionate the amount as follows :
Amount of interest for a year = 708.55 × 12 /5 = $1700.52
Rate of interest = Amount of interest for a year × 100 / Amount of investment
1700.52 × 100 / 19,000 = 8.95%
So answer is 8.95 %