Question

What annual simple interest rate will increase Jacob Davidson's initial investment of $5,000 to $6,000 in two years? (Hint: Use the formula I = prt and substitute known values to find I.)

Answer 1

Answer: r=10%

Explanation:

1. You have that Jacob Davidson's initial investment of $5,000 to $6,000 in two years. Therefore, you must solve for
`r` in the given formula:

`I=prt\\r=(I)/(pt)`

Where I is the interest, p is the principal invested, r is the interest rate and t is the time in years.

2. Substitute values and solve:

`r=(1,000)/((5,000)(2))\\r=0.1`

`r=10`%