Question

Amanda made $600 In interest by placing 5000 in savings account with simple interest for 4years. What was the interest rate?

Answer 1

Answer: 3%

Explanation:

We can use this equation to solve for the simple interest:

A = P(1 + rt)

We will substitute our known values and solve:

➜ A = final amount ($5,000 + $600 = $5,600)

➜ P = initial balance ($5,000)

➜ r = interest rate (solving for r)

➜ t = time (4 years)

A = P(1 + rt)

5,600 = 5,000(1 + (r)(4))

`(5,600)/(5000)` = 1 + (r)(4)

1.12 = 1 + 4r

0.12 = 4r

4r = 0.12

r = 0.03

r = 3%