Question

After 4 months, $600,000 deposited in a savings account with simple interest had earned $8,400 in interest. What was the interest rate?

Answer 1

the simple interest formula is

`I=Prt`

where I is the interest, P the principa, r the rate and t the time.

We know that,

`\begin{gathered} P=600000 \\ I=8400 \\ t=(1)/(3) \end{gathered}`

hence,

`\begin{gathered} r=(I)/(Pt) \\ \text{then} \\ r=(8400)/((60000)((1)/(3))) \\ r=(8400)/(200000) \\ r=0.042 \end{gathered}`

In other words r=4.2%