46.4k views
1 vote
If you pay $5,500 for a simple interest note that will be worth $6,000 in 21 months,

what annual simple interest rate will you earn?

User Rebolon
by
8.3k points

2 Answers

5 votes

Answer: The annual simple interest rate is 5.19%

Explanation:

The formula for determining simple interest is expressed as

I = PRT/100

Where

I represents interest paid on the simple interest note.

P represents the principal or amount paid for the simple interest note.

R represents interest rate

T represents the duration in years.

From the information given,

P = 5500

T = 21 months = 21/12 = 1.75 years

I = 6000 - 5500 = $500

500 = (5500 × R × 1.75)/100

500 = 9625R/100 = 96.25R

R = 500/96.25

R = 5.19%

User Jonathan Bick
by
8.2k points
1 vote

Answer:

5.19%

Explanation:

The amount of an account (A) earning simple interest rate r for time t on principal P is ...

A = P(1 +rt)

Filling in the given values and solving for r gives ...

6000 = 5500(1 +r(21/12))

12/11 = 1 + r(7/4) . . . . . . . . . . divide by 5500, simplify fractions

1/11 = r(7/4) . . . . . . . . subtract 1

4/77 = r . . . . . . . . . . . multiply by 4/7

r ≈ 0.051948 ≈ 5.19%

You will be earning about 5.19% annual simple interest.

User Draaksward
by
8.3k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories