Question

An investment of $5000 earns $6000 simple interest in 12 years. Calculate the interest rate.

Answer 1

Answer:

10%

Step-by-step explanation:

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

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

I = interest amount

P = principal amount

t = time (years)

Lets plug in the values:

$r=\frac{6000}{(5000)(12)}$

$r=0.1$

The last step is to convert 0.1 into a percent:

0.1(100) = 10

The interest rate is 10%