Answer:
The simple interest rate is 5%.
This is possible with a rate of 6%, since in this case, his amount earned will be $5,208.
Step-by-step explanation:
This is a simple interest problem.
The simple interest formula is given by:
In which E is the amount of interest earned, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time.
After t years, the total amount of money is:
Joshua has $4,200 to invest for college. If Joshua invests $4,200 for 3 years and earns $630, what is the simple interest rate?
We have that
. We have to find I.
![630 = 4200*I*3](https://tex.z-dn.net/?f=630%20%3D%204200%2AI%2A3)
![I = \frac{630}{4200*3}](https://tex.z-dn.net/?f=I%20%3D%20%5Cfrac%7B630%7D%7B4200%2A3%7D)
![I = 0.05](https://tex.z-dn.net/?f=I%20%3D%200.05)
The simple interest rate is 5%.
Joshua’s goal is to have $5,000 after 4 years. Is this possible if he invests with a rate of return of 6%?
We have to find T when ![P = 4200, t = 4, I = 0.06](https://tex.z-dn.net/?f=P%20%3D%204200%2C%20t%20%3D%204%2C%20I%20%3D%200.06)
So
![E = 4200*0.06*4](https://tex.z-dn.net/?f=E%20%3D%204200%2A0.06%2A4)
![E = 1008](https://tex.z-dn.net/?f=E%20%3D%201008)
![T = E + P = 4200 + 1008 = 5208](https://tex.z-dn.net/?f=T%20%3D%20E%20%2B%20P%20%3D%204200%20%2B%201008%20%3D%205208)
This is possible with a rate of 6%, since in this case, his amount earned will be $5,208.