Question

You deposited 8500 dollars in a saving account that earns a simple interest rate. what interest rate do you need to be paid if you require 10093.75 after 60 months

Answer 1

Answer:

23.75%

Step-by-step explanation:

Use formula

$I=P\cdot r\cdot t,$

where

I = interest,

P = principal,

r = rate (as decimal),

t = time (in years).

In your case,

$I=\ 8,500\\ \\P=\ 10,093.75\\ \\t=60\text{ months}=5 \text{ years}$

Substitute:

$10,093.75=8,500\cdot r\cdot 5\\ \\r=\dfrac{10,093.75}{8,500\cdot 5}=0.2375=23.75\%$