Question

If the simple interest on a $5,000 for 8 years is $2,000, then what is the interest rate?

Answer 1

Given data:

The principal is

`P=\text{ \$5,000}`

The time is

`t=8`

The interest is

`=\text{ \$2,000}`

Concept:

The formula to calculate interest rate (R) is given below as

`\begin{gathered} I=(P* R* T)/(100) \\ 100I=P* R* T \\ divide\text{ both sides by PT} \\ R=(100I)/(PT) \end{gathered}`

By substituting the values in the formula above, we will have

`\begin{gathered} R=(100I)/(PT) \\ R=(100*2000)/(5000*8) \\ R=(200000)/(40000) \\ R=5 \end{gathered}`

Hence,

The final answer is 5%