Question

An investment of $5000 earns $6000 simple interest in 12 years. Calculate the interest rate.

Please show working out

Answer 1

10%

Explanation:

To solve this problem we can use a modified version of the simple interest formula which is shown below:

`r=(I)/(Pt)`

I = interest amount

P = principal amount

t = time (years)

Lets plug in the values:

`r=(6000)/((5000)(12))`

`r=0.1`

The last step is to convert 0.1 into a percent:

0.1(100) = 10

The interest rate is 10%