Question

The equation below can be used to determine I, the amount of simple interest on a loan. I = prt, where p is the principal, r is the rate of the loan, and t is the length of the loan in years. Write down the equation solved in terms of r?

Answer 1

To solve the simple interest formula for the interest rate, divide the interest (I) by the product of the principal (p) and time (t), resulting in the formula r = I / (pt). For example, with $500 interest on a $10,000 loan for 5 years, r = $500 / ($10,000 * 5) gives a rate of 1%.

Step-by-step explanation:

To solve the simple interest formula I = prt for the interest rate r, you can follow these steps:

1. To isolate r, we want to get r by itself on one side of the equation. To do this, we need to divide both sides of the equation by p (principal) and t (time).
2. Doing this, we get the new equation r = I / (pt).
3. Now you can use this equation to determine the interest rate by plugging in the values for I (interest), p (principal), and t (time).

For example, if you received $500 in simple interest on a loan that you made for $10,000 for five years, you would plug these values into the formula to find the rate:

r = $500 / ($10,000 \times 5 years)

r = $500 / $50,000

r results in 1% after performing the division.