Question

After 10 months the simple interest of a 6,000 investment was $769. What is the interest rate

Answer 1

Answer:

Interest rate ( r ) = 15.38% or 0.1538

Step-by-step explanation:

Given the principal (P) = $6,000, and the simple interest of $769 earned after 10 months:

We can determine the interest rate (r ) by creating its formula algebraically, then use the equation to solve for its value.  

Using the simple interest formula,  

I = P × r × t

where:

I = interest amount = $769

P = present value of the principal = $6,000

r = interest rate

t = time  = 10/12 (10 months out of 12 months) = 0.83333

I = P × r × t

Divide both sides by P × t:

I / ( P × t ) = P × t × r / ( P × t )

I / ( P × t ) = r

Therefore, the formula for the interest rate is: r = I / ( P × t )

Substitute the given values into the formula to solve for r:

r = I / ( P × t )

r = $769 / ($6,000 × 0.83333)

r = $769/ 4,999.99999

r = 0.1538 or 15.38%

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