Question

If the simple interest on ​$1 comma 000 for 2 years is ​$120​, then what is the interest​ rate?

Answer 1

6%

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=(120)/((1,000)(2))`

`r=.06`

The last step is to convert 0.06 into a percent:

0.06(100) = 6

The interest rate is 6%.