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On May 1, 2007, Lisa deposited $792 in an account earning simple discount at an annual...

On May 1, 2007, Lisa deposited $792 in an account earning simple discount at an annual rate d. On May 1, 2014, Lisa's balance was 1287.8. How much interest did Lisa earn between May 1, 2007, and May 1, 2010?

Solutions

Expert Solution

As per simple discount method, rate can be computed as:

Discount rate = Interest / (Principal x time)

= ($ 1,287.80 - $ 792)/ ($ 792 x 7)

= $ 495.80/ $ 5,544

= 0.08943001443

Interest earned between May 1, 2007 to May 1, 2010 = Principal x rate x time

                                                                                     = $ 792 x 0.08943001443 x 3

                                                                                     = $ 212.485714285714 or $ 212.49

Interest earned between May 1, 2007 to May 1, 2010 is $ 212.49

jeff jeffy answered 1 year ago
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