Question

What interest is needed to earn $137.50 on a deposit of $500 for five years if it earns simple interest?

Answer 1

5.5%

Explanation:

Given data

Simple interest = $137.50

Principal= $500

time = 5 years

We want to find the rate R

Simple interest= PRT/100

137.50 = 500*R*5/100

137.50=2500R/100

cross multiply

137.5*100= 2500R

13750= 2500R

divide both sides by 2500

R= 13750/2500

R=5.5%

Hence the rate is 5.5%