Question

At what rate would u need to invest $25000 to earn $5000 in 2 years?

Answer 1

Answer:

The appropriate interest rate would be 10%.

Step-by-step explanation:

Without further info I must assume that you want "simple interest" on the $25000 principal.  The appropriate formula for simple interest is:

i = p*r*t, where p is the principal amount, r is the interest rate as a decimal fraction, and t is the time in years.

                                                                                                    i

We want the rate, r, so we solve this equation for r:    r = -------------

                                                                                                   p*t

Now we're in a position to substitute the known values of i, p and t and to calculate r from them:

            $5000                   1

r = ---------- ------------- = --------------- = 0.10  

     ($25000)(2 yrs)            10

The appropriate interest rate would be 10%.