Jerome deposited $8,000 into a new retirement account with a simple interest rate of 2.8%. If account has earned $3,808 in interest, and there have been no deposits or withdraws, how many years ago did he open the account?

Answer :

Jerome opened the account 17 years ago

Solution:

Jerome deposited $8,000 into a new retirement account with a simple interest rate of 2.8%

Therefore,

Principal = $ 8000

Rate of interest = 2.8 %

The account has earned $3,808 in interest

Simple interest earned = $ 3808

The formula for simple interest is given as:

[tex]\text{ Simple interest} = \frac{p \times n \times r}{100}[/tex]

Where,

"p" is the principal and "n" is the number of years and "r" is the rate of interest

Substituting the known values,

[tex]3808 = \frac{8000 \times n \times 2.8}{100}\\\\3808 = 80 \times n \times 2.8\\\\3808 = 224 \times n\\\\n = \frac{3808}{224}\\\\n = 17[/tex]

Thus he opened the account 17 years ago

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