Question

The interest on $2,000 for 2 years is $320. What is the simple interest rate?

Answer 1

R = 8%/year

Equation:
r = (1/t)(A/P - 1)
Calculation:
Solving our equation:
r = (1/2)((2320/2000) - 1) = 0.08
r = 0.08

Converting r decimal to R a percentage
R = 0.08 * 100 = 8%/year

The interest rate required to get a total amount, principal plus interest, of $2,320.00 from simple interest on a principal of $2,000.00 over 2 years is 8% per year.