Question

$4000.00 investment. Over 3 years $1080.00 interest accumulated. What was the interest on the loan? The interest is shown in percent as the answer.

Answer 1

9% interest rate

Explanation:

Investment = principal = $4000

Interest amount = $1080

Period, t = 3 years

Simple interest = principal * rate * time

1080 = 4000 * rate * 3

1080 = 12000 * rate

Rate = 1080 / 12000

Rate = 0.09

The rate as a percentage = 0.09 * 100% = 9%