Question

If the simple interest on $4,000 for 4 years is $1,280, then what is the interest rate?

a) The rate is 96%
b) The rate is 8%
c) The rate is 4%
d) The rate is 32%

Answer 1

The interest rate for the simple interest on $4,000 over 4 years that amounted to $1,280 is 8%.

Step-by-step explanation:

To find the interest rate for the given simple interest on $4,000 over 4 years which resulted in $1,280, we use the simple interest formula:
I = P × r × t

Where I is the interest, P is the principal amount, r is the rate of interest per period, and t is the time period. Using the values given:
1280 = 4000 × r × 4

First, we will isolate r:
r = 1280 / (4000 × 4)
r = 1280 / 16000
r = 0.08

we multiply by 100:
r × 100 = 0.08 × 100 = 8%

Thus, the interest rate is 8%.