Question

After 1 year, $50,000 deposited in a savings account with simple interest had earned $2,500 in interest. What was the interest rate?

pls explain how as well if you don't mind

Answer 1

Interest Rate = 5%

Explanation:

Principal = $50, 000

Rate = ?

Time = 1 yr

S.I = PRT/100

2,500/1 = 50,000 × R × 1/100

50,000R = 2,500 × 100

50,000R = 250,000

50,000R/50,000 = 250,000/50,000

R = 5 %

Answer 2

5%

Explanation:

The formula for calculating simple interest is:

Interest = Principal × Rate × Time

Where:

Interest is the amount of money earned as interest

Principal is the initial amount of money deposited

Rate is the interest rate (expressed as a decimal)

Time is the duration for which the money is invested or the time period over which interest is calculated

In this scenario, the principal amount is $50,000, and the interest earned is $2,500. The time period is given as 1 year.

We can rearrange the formula to solve for the rate:

Rate = Interest / (Principal × Time)

Plugging in the given values:

Rate = $2,500 / ($50,000 × 1)

The calculation simplifies to:

Rate = $2,500 / $50,000

Dividing $2,500 by $50,000 gives us the decimal value of the interest rate:

Rate = 0.05

To express the interest rate as a percentage, we multiply the decimal value by 100:

Rate = 0.05 × 100

Rate = 5%

Therefore, the interest rate for the savings account is 5%.