The interest rate is 3.5%.
EXPLANATION
We substitute the given values into the formula;

to obtain

We divide through by 6000 to obtain,

This implies that,

We take the square root of both sides,

This gives us,

Add -1 to both sides of the equation to obtain

Multiply through by 100 to obtain;

%
Yes, his estimate is reasonable. But only if Michael is less than 2 years old.
7000
1/8th in percentage form is 12.5%
12.5% of 56000 is 7000