Question

Ethan invested £500 in the bank for 2 years. He earned £40 simple interest in total. What was the simple interest rate per annum?​

Answer 1

4%

Explanation:

The formula for simple interest is I = Prt, where I is the interest, P is the principal amount, r is the interest rate, and t is the time in years.

In this case, we know that:

P = £500 (the principal amount)

I = £40 (the interest earned)

t = 2 years (the time the money was invested)

We can rearrange the formula to solve for r:

r = I / Pt

Substituting the given values, we get:

r = 40 / (500 x 2)

r = 0.04 or 4%

Therefore, the simple interest rate per annum is 4%.