Question

If the simple interest on $900 for 3 years was 108, what was the rate of interest?​

Answer 1

Simple interest can be found using the simple interest formula:

I = interest

P = principal

r = interest rate

t = time

I = P × r × t.

In our instance,

I = $108

P = $900

r = ?

t = 3.

Plug our numbers into the simple interest formula above.

$108 = ($900) × r × (3).

Simplify the right side

$108 = $2,700r.

Divide each side by $2,700.

0.04 = r.

0.04 × 100 = 4%

The rate of interest is 0.04 or 4%