Question

Ethan invested £500 in the bank for 2 years. he earned £40 simple interest in total. what was the simple interest rate per annum

Answer 1

Answer:

4%.

Step-by-step explanation:

We have been given that Ethan invested £500 in the bank for 2 years. He earned £40 simple interest in total. We are asked to find the annual interest rate.

We will use simple interest formula to solve our given problem.

$I=Prt$, where,

I = Amount of interest,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

Upon substituting our given values in above formula, we will get:

$40=500*r*2$

$40=1000*r$

Now, we will divide both sides of our given equation by 100.

$\frac{40}{1000}=\frac{1000*r}{1000}$

$\frac{4}{100}=r$

$\frac{1}{25}=r$

$0.04=r$

Since our given interest rate is in decimal form, so we need to convert it in percentage.

$0.04\times 100\%=4\%$

Therefore, the simple interest rate per annum is 4%.

Answer 2

The formula is
I=prt
I interest earned 40
P principle 500
R interest rate?
T time 2 years
Solve the formula for r by dividing both sides by pt to get
R=I/pt
R=40÷(500×2)
R=0.04×100
R=4%

Hope it helps!