Question

If $1600 earned simple interest of $56.24 in 2 months, what was the simple interest rate? The simple interest rate is % (Do not round until the final answer. Then round to the nearest tenth as needed.)

Answer 1

Answer:

The interest rate is of 21.09% a year.

Step-by-step explanation:

This is a simple interest problem.

The simple interest formula is given by:

$E = P*I*t$

In which E are the earnings, P is the principal(the initial amount of money), I is the interest rate(yearly) and t is the time.

So, for our problem, we have:

If $1600 earned simple interest of $56.24 in 2 months, so:

$P = 1600, E = 56.24$.

The interest value is a yearly value, however the time is given in months. This means that we have to divide the time by 12(that is the number of months in a year). So

$t = \frac{2}{12} = \frac{1}{6}$

Solution:

$56.24 = 1600*I*\frac{1}{6}$

$1600I = 6*56.24$

$1600I = 337.44$

$I = \frac{337.44}{1600}$

$I = 0.2109$

The interest rate is of 21.09% a year.