Question

What is the interest rate if a principal of $700 earns $196.00 in interest in seven years?

Answer 1

Answer:

4%

Step-by-step explanation:

To solve this problem we can use a modified version of the simple interest formula which is shown below:

$r=\frac{I}{Pt}$

P = initial balance

I = interest

t = time

Plug the values into the equation:

$r=\frac{196}{(700)(7)}$

$r=.04$

The last step is to convert 0.04 into a percent:

0.04(100) = 4

The interest rate is 4%.