Question

If nelson invests $5000 for 4 years and earns $600, what is the simple interest rate?

Answer 1

Answer: Simple interest rate = 3%.

Step-by-step explanation: We are given invested amount = $5000.

Number of years of investment = 4 years.

Interest earned = $600.

Simple interest formula.

I = P R T.

Where I is the earned interest, P is the invested amount , R is the rate of interest and T is the time in years.

Plugging values in formula, we get

600 = 5000 × R × 4

600 = 20000R.

Dividing both sides by 20000, we get

$\frac{600}{20000} = \frac{20000R}{20000} .$

0.03 = R.

Multiplying by 100 to convert it in percentage, we get

0.03 × 100 = R

R = 3 %.