Question

The annual interest rate earned by an investment increased by 10 percent from last year to this year. If the annual interest rate earned by the investment this year was 11 percent, what was the annual interest rate last year?

• A. 1
• B. 1.1
• C. 9.1
• D. 10

Answer 1

The Correct Option is D

Let the interest rate last year be \( x \). According to the problem, the interest rate increased by 10%, so the interest rate this year is \( 1.1x \). We are given that the interest rate this year is 11%, so:
\[ 1.1x = 11 \]
Solve for \( x \):
\[ x = \frac{11}{1.1} = 10 \]

To find the previous value after a percentage increase, divide the current value by \( 1 + \text{percentage increase as a decimal} \).