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

.06 or 6 percent


Calculation:
First, converting R percent to r a decimal
r = R/100 = 6%/100 = 0.06 per year.

Solving our equation:
A = 1875(1 + (0.06 × 10)) = 3000
A = $3,000.00

The total amount accrued, principal plus interest, from simple interest on a principal of $1,875.00 at a rate of 6% per year for 10 years is $3,000.00.