Question

If Pablo invests $4200 for 3 years and earns $630, what is the simple interest rate? Pablo’s goal is to have $5000 after 4 years. Is it possible with a rate of 6%? Explain.

Answer 1

If Pablo invests 4200 for three years then the interest rate would be about 3.4%. Yes it is possible for Pablo to get to $5,000 after four years with a rate of 6%.

Explanation:

If A = P( 1 + rt ) you enter in the numbers given A = 4200( 1 + (0.06 x 4)) it will equal 5,208. The total amount accrued, principal plus interest, from simple interest on a principal of $4,200.00 at a rate of 6% per year for 4 years is $5,208.00.