Question

Mariska was comparing her options for investment. One choice she was looking at showed that her principal of $1,875 over 10 years would earn $1,125 in interest giving her a total of $3,000 at the end of the investment period. What interest rate is being used to calculate this investment?

Answer 1

Answer: 6%

Explanation:

Principal= $1875

Time= 10 years

Interest= $1125

Rate = Unknown

Recall that,

Interest= (Principal×Rate×Time)/100

I = PRT/100

100I = PRT

R= (100×I)/PT

Rate = (100 × 1125)/(1875 × 10)

Rate = 112500/18750

Rate= 6%

The rate is 6%