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You invest in $5,000 in an account earning simple interests. The balance after 6 years is $6,200. What is the interests rate?

1 Answer

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Answer:

The interest rate is 4% per annum.

Explanation:

Let the interest rate that I am getting is r% per annum.

So, my $5000 investment becomes $6200 after getting r% simple interest for 6 years.

So, from formula of simple interest we can write


6200 = 5000(1 +(rt)/(100))


1.24 = 1 + (6r)/(100)


(6r)/(100) = 0.24

r = 4%

Therefore, the interest rate is 4% per annum. (Answer)

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