Since simple interest doesn't involve compounding, the same amount gets added on every year. So, the equation for the simple interest received is [tex]I = Prt[/tex], where [tex]I[/tex] is the total interest, [tex]P[/tex] is the original deposit (or "principal"), [tex]r[/tex] is the interest rate, and [tex]t[/tex] is the time passed in years.
Plugging in our values, we can solve for the interest rate:
[tex]I = Prt[/tex]
[tex]\$1380 - \$1200 = (\$1200)(r)(3 years)[/tex]
[tex]\$180 = (\$1200)(r)(3 years)[/tex]
[tex]r = .05 = \bf 5 \%[/tex]
