Answer:
The annual simple interest rate for the certificate of deposit is 5.33%
Step-by-step explanation:
Given as :
The amount of money which Luis deposit = P = $ 4500
The time period for deposit = 36 months = T = 3 years
Let The rate of simple interest for deposit = r %
The interest which he earn each month for next 36 months = $ 20
I,e The interest which he earn = SI = $20 × 36 = $720
Now, From Simple Interest method
Simple Interest = [tex]\dfrac{\textrm Principal\times \textrm rate\times \textrm time}{100}[/tex]
or, SI = [tex]\dfrac{\textrm P\times \textrm r\times \textrm t}{100}[/tex]
Or, $ 720 = [tex]\dfrac{\textrm $ 4500\times \textrm r\times \textrm 3}{100}[/tex]
Or, $ 720 = [tex]\dfrac{13500\times r}{100}[/tex]
Or, 720 = 135 r
∴ r = [tex]\frac{720}{135}[/tex]
I.e r = 5.33 %
So, The rate of simple interest for deposit = 5.33 %
Hence The annual simple interest rate for the certificate of deposit is 5.33% Answer
