Question

Victor calculates the percentage interest rate he needs to make $500 in simple annual interest over 5 years on a deposit of $1000. Where did he go wrong?

Answer 1

\[I = prt \]
\[1,000 = 500 \times r \times \]
\[r = 0.4\]
\[r = 40percent\]

Answer 2

A) He applied the principal and interest to the wrong variables.

B) He should have divided 2 by twelve to get the value for t.

C) He misrepresented the earned interest with the final balance.

D) He should have multiplied r by one hundred to get the interest rate as a percentage.