Question

A $5000 investment earns $1575 simple interest in three years. What is the annual interest rate?

a. 1.05%
b. 3.15%
c. 10.5%
d. 31.5%

Answer 1

I=PRT
P=principal
I=interest
R=rate
T=time in years

Principal=5000
Interest=1575
R=?
T=3 years

I=PRT
1575=(5000)(R)(3)
1575=15000(R)
divide both sides by 15000
0.105=R
we need to covert to percent
x%=x/100
0.105/1 times 100/100=10.5/100=10.5%

answer is C