Charles deposited $12,000 in the bank. He withdrew $5000 from his account after one year. If...

Charles deposited $12,000 in the bank. He withdrew $5000 from his account after one year. If he receives a total amount of $9340 after 3 years, find the rate of simple interest.

Expert Solution

Years	Principal	Interest @10%	Interest @8%	Interest @9%
1	12000	1,200	960	1080
2	7000	700	560	630
3	7000	700	560	630
	Total interest amount	2,600	2,080	2,340

	The principal value which charles will receive at the end of 3rd year will be $7,000, since
	he withdraw $5,000 at end of year 1
	It means that charles will receive a total of $2,340($9,340-$7,000) as interest.
	As we can see from the above table that by trial and error method the simple interest rate is 9%
	Note:We can also perfrom interpolation and find out the Interest rate.

ekkarill92 answered 6 months ago

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