Question

You put $16,500 in an investment. After 54 months you have a balance of $19,470. What is the rate of simple interest?

Answer 1

Answer:

The interest after 54 month is $2970 and the rate is 4%.

Step-by-step explanation:

The amount of interest gathered in 54 months is equal to the final amount subtracted by the initial one. We have:

interest = 19470 - 16500

interest = $2970

In order to calculate the rate we need to apply the formula for simple interest shown below:

interest = C*r*t

Where C is the initial amount, r is the rate of interest and t is the time elapsed in years. We have:

2970  = 16500*r*(54/12)

2970 = 16500*r*(4.5)

74250*r = 2970

r = 2970/74250

r = 0.04

The rate is r*100% = 4% per year.