Question

A retired couple invested $8000 in bonds. At the end of one year, they received an interest payment of $456. What was the simple interest rate of the bonds?

Answer 1

5.7%

Explanaton:

let amount invested = Principal = $8000

time = 1 year

rate = ?

Interest = $456

To get the rate, we'll apply simple interest formula:

`\begin{gathered} I\text{ = PRT} \\ I\text{ = interest, P = principal, R = rate, T = time} \end{gathered}`
`\begin{gathered} 456\text{ = 8000}* R*1 \\ 456\text{ = 8000R} \\ \text{divide both sides by 8000:} \\ (456)/(8000)\text{ =}(8000R)/(8000) \\ \\ R\text{ = 0.057} \\ In\text{ percent, rate = 0.057}*100 \\ \text{Rate = 5.7\%} \end{gathered}`

Hence, the simple rate of the bonds is 5.7%