Question

You put $5,000 in a simple interest account at a bank. You earn $1,200in just 4 years. What is the annual interest rate for the account?

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)

Now, lets plug in the values:

`r=(1,200)/((5,000)(4))`

`r=.06`

The last step is to convert 0.06 into a percent:

0.06(100) = 6

The interest rate is 6%.