Question

you deposited 8500 dollars in a savings account that earns a simple interest rate what interest rate do you need to be paid if you require 10093.75 after 5 years

Answer 1

we know that

The simple interest formula is equal to

`A=P(1+rt)`

where

A is the Final Investment Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=5\ years\\ P=\$8,500\\ A=\$10,093.75\\r=?`

substitute in the formula above

`10,093.75=8,500*(1+r*5)`

solve for r

`5*r=(10,093.75/8,500)-1`

`r=0.0375`

`r=3.75\%`

therefore

the answer is

the rate of interest is
`3.75\%`