Samantha purchased a five-year municipal bond that pays simple

Question

Samantha purchased a five-year municipal bond that pays simple interest for $600. After the bond matured five years later, she had received a total of $720 in principal plus interest payments. What is the interest rate of Samantha's bond?

A. 4%
B. 5%
C. 10%
D. 12%
E. 20%

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alamin8 · Answer

We know,
Interest = Principal x # of years x rate
(720-600) = 600 x 5 x rate
120/(600 x 5) = rate
rate = 1/25 = 0.04 = 4%

Answer is A

dhart · Answer

option A lokos good !

A= maount , P is principal

A = P + PRN
A = P(1+RN)
720= 600 (1+RN)
1.2 = 1+RN
RN= .2
R = .2/5 = 2/50
r=2/50*100

r=4%

abhishekb1352 · Answer

Here WKT SI = PRT/100
SI = 720-600 = 120 dollars
T = 5 years and P= 600 dollars
So, 120 = (600*R*5)/100

R = 4% p.a
Hence Option A is right answer.

odionam · Answer

A=P+I, A-P=I(P*R*T/100)
720-600= 600*5*r/100 120/30= 4%

Samantha purchased a five-year municipal bond that pays simple

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Samantha purchased a five-year municipal bond that pays simple

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