Question

Ms Kowal invests £6000 in a simple interest account.

After 5 years her investment has earned £450 interest.
What rate of interest does the account pay?

Answer 1

We can use the simple interest formula I = Prt to find the rate of interest that the account pays. Here, P is the principal amount (£6000), t is the time period (5 years), and I is the interest earned (£450). Substituting these values in the formula gives us: 450 = 6000 * r * 5. Solving for r, we get r = 0.015 or 1.5%. Therefore, the account pays a simple interest rate of 1.5%