Question

What rate of interest is required to have a $5000 investment grow to $5250 in 9 months (rate to 2 decimal places)?

A. 5.26%
B. 6.00%
C. 10.00%
D. 15.00%

Answer 1

To have a $5000 investment grow to $5250 in 9 months, a rate of interest of 5.00% is required.

Therefore, the rate of interest required is 5.00% (option A).

Step-by-step explanation:

To calculate the rate of interest required to have a $5000 investment grow to $5250 in 9 months, we can use the formula:

Final Amount = Principal + (Principal x Rate x Time)

Here, the final amount is $5250, the principal is $5000, and the time is 9 months or 9/12 years. We need to solve for the rate.

Let's substitute the given values into the formula:

$5250 = $5000 + $5000 x Rate x (9/12)

Simplifying the equation:

Rate = ($5250 - $5000) / ($5000 x (9/12))

Rate = ($250) / ($5000 x (9/12))

Rate = 0.05 or 5%

Therefore, the rate of interest required is 5.00% (option A).