119k views
5 votes
What is the interest rate used if the amount of interest earned is $650 on an investment of $1000 for 2 years?

User Fintasys
by
4.4k points

1 Answer

4 votes

Answer

Interest Rate = 32.5%

Step-by-step explanation

The simple interest earned on an investment, P, invested at a rate or R% over time, T, is given as

Simple Interest = (PRT/100)

For this question,

Simple Interest = $650

P = Amount invested = $1000

R = Rate = ?

T = Time = 2 years

Simple Interest = (PRT/100)

650 = (1000 × R × 2)/100

650 = (2000R/100)

650 = 20R

Divide both sides by 20

(650/20) = (20R/20)

32.5 = R

R = 32.5%

Hope this Helps!!!

User Tomer Gal
by
4.9k points