At what simple annual interest rate must $2,500 be invested if it is to earn $225 in interest in one year?

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GMAT Prep

At what simple annual interest rate must $2,500 be invested if it is to earn $225 in interest in one year?

A. 6%
B. 7%
C. 8%
D. 9%
E. 10%

OA D

[Brent@GMATPrepNow]

GMAT Prep

At what simple annual interest rate must $2,500 be invested if it is to earn $225 in interest in one year?

A. 6%
B. 7%
C. 8%
D. 9%
E. 10%

OA D

Let x = the PERCENT annual interest rate

So, we want: x percent of $2,500 = 225
Rewrite as: x/100 of $2,500 = 225
In other words: (x/100)(2,500) = 225
Simplify: 2500x/100 = 225
Simplify again: 25x = 225
Solve: x = 225/25 = 9

Answer: D

Cheers,
Brent