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

23.75%

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=(10,093.75)/(8,500\cdot 5)=0.2375=23.75\%`