A certain money market account that had a balance of $48,000 during all of…

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A certain money market account that had a balance of $48,000 during all of last month earned $360 in interest for the month. At what simple annual interest rate did the account earn interest last month ?

  1. A.

    9%

  2. B.

    8%

  3. C.

    7%

  4. D.

    8.5%

Attempted by 7 students.

Show answer & explanation

Correct answer: A

Step-by-Step Solution

To find the annual simple interest rate, we use the simple interest formula while being careful to express time in years.

  1. Identify the given values:

    • Principal (P) = 48,000

    • Interest (SI) = 360

    • Time (T) = 1 month = 1/12 of a year

  2. Use the Simple Interest formula:

    • SI = (P * R * T) / 100

    • 360 = (48,000 * R * (1/12)) / 100

  3. Simplify and solve for R:

    • 360 = (48,000 / 12) * R / 100

    • 360 = 4,000 * R / 100

    • 360 = 40 * R

    • R = 360 / 40

    • R = 9

The annual simple interest rate is 9%.

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