Question

If the simple interest on $5,000 for 6 years is 1,200 then what is the interest rate?

Answer 1

4%

Explanation:

You can use the formula below to find the simple interest rate.

Simple interest = P r t / 100

Here,

P ⇒ Principle ⇒ $ 5000

r ⇒ rate ⇒ ??

t ⇒ time ⇒ 6 years

simple interest ⇒ $ 1200

Let us find it now.

Simple interest = P r t / 100

1200 = 5000 × r × 6 / 100

1200 × 100 = 30000r

120000 = 30000 r

Divide both sides by r.

4 = r

Therefore, the interest rate is 4%