Question

Russell made $480 in interest by placing $2,000 in a savings account with simple

interest for 2 years. What was the interest rate?

Answer 1

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

I = P * r * t

Where I is the interest, P is the principal (the amount of money in the account), r is the interest rate, and t is the time (in years).

We know that I = $480, P = $2,000, and t = 2 years.

Plugging these values into the formula, we get:

$480 = $2,000 * r * 2

Dividing both sides by $2,000 * 2, we get:

r = $480 / $2,000 * 2

r = 0.12

So, the interest rate is 0.12, or 12%.