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What interest rate is needed for $9500 to earn $900 in 19 months? Round to the nearest hundredth of a percent

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7 votes

Answer:

approximately 5%

Explanation:

To find the interest rate, you can use the formula for simple interest:

\[ \text{Interest} = P \times r \times t \]

where:

- \( P \) is the principal amount (\$9500),

- \( r \) is the interest rate,

- \( t \) is the time in years (19 months converted to years is \( \frac{19}{12} \)).

The given interest is $900.

\[ 900 = 9500 \times r \times \frac{19}{12} \]

Now, solve for \( r \):

\[ r = \frac{900}{9500 \times \frac{19}{12}} \]

\[ r \approx 0.05 \]

To express this as a percentage and round to the nearest hundredth:

\[ r \approx 5\% \]

Therefore, the interest rate needed for $9500 to earn $900 in 19 months is approximately 5%.

User Dan Alvizu
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