Question

I = Prt

to solve the following problem. If a $1,200 investment earns
$210 over 5 years, what is the annual interest rate?

Answer 1

`r=3.5\%`

Explanation:

we know that

The simple interest formula is equal to

`I=P(rt)`

where

I is the Final Interest Value

P is the Principal amount of money to be invested

r is the rate of interest

t is Number of Time Periods

in this problem we have

`t=5\ years\\ P=\$1,200\\ I=\$210\\r=?`

substitute in the formula above

`210=1,200(5r)`

solve for r

`r=210/6,000`

`r=0.035`

convert to percentage (multiply by 100)

`r=3.5\%`