Question

Determine the simple interest rate for each given principal, time, and simple interest earned.

Principal: $1200
Time: 15 years
Simple Interest: 5720

Answer 1

32%

Explanation:

5720/15=381.33 interest per year

principal x interest rate = interest per year

1200 x interest rate =381.33

interest rate = 381.33/1200

interest rate = 32%

Answer 2

31.8%

Explanation:

The formula for simple interest is I = PRT, where I = interest earned/paid, P = principal amount deposited or borrowed, R = rate of interest as a decimal, and T = time in years.

I = PRT

5720 = (1200)(R)(15)

5720 = 18,000R

R = 0.3177777, rounded to 31.8%