Answer:
B. 20%
Step-by-step explanation:
Let r represent rate of interest.
We have been given that Mika invested $200 into a certificate of deposit. After 6 months, the balance was $220.
We will use simple interest formula to solve our given problem.
[tex]I=Prt[/tex]
I = Amount of interest,
P = Principal amount,
r = Rate of interest in decimal form,
t = Time in years.
First of all, we will find amount of interest by subtracting $200 from $220 as:
[tex]\$220-\$200=\$20[/tex]
6 month = 1/2 year = 0.5 year
Upon substituting our given values in simple interest formula, we will get:
[tex]\$20=\$200*r*0.5[/tex]
[tex]\$20=\$100*r[/tex]
Upon dividing both sides by $100, we will get:
[tex]\frac{\$20}{\$100}=\frac{\$100*r}{\$100}[/tex]
[tex]0.2=r[/tex]
Since interest rate is given in decimal, so we will multiply 0.2 by 100 to convert our answer in percentage.
[tex]0.2\times 100\%=20\%[/tex]
Therefore, the interest rate on the deposit was 20% and option B is the correct choice.
