SOLUTION: If 20 years ago I put $5000 into an account that earned simple annual interest and in that account today I now have $12,000 what was my annual interest rate?
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Question 625357: If 20 years ago I put $5000 into an account that earned simple annual interest and in that account today I now have $12,000 what was my annual interest rate? Answer by reynard2007(52) (Show Source):
You can put this solution on YOUR website!
Simple interest is calculated on the original amount only whereas compound interest is calculated on the original plus the interest for the previous year/s.
Knowing that, we only get the difference between the initial/principal and the final value. That is $7,000. You were able to earn that in 20 years, so each year you gain 7000 / 20 = $350.
