Question

If $11000 yields $1100 over 5 years, what is the interest rate?

Answer 1

1.92449%

Explanation:

Simple Interest Rate Formula: A = P(1 + r)ⁿ

Step 1: Define variables

Principle amount P = 11000

Total amount A = 11000 + 1100 = 12100

Years n = 5

Step 2: Substitute and Evaluate for r

12100 = 11000(1 + r)⁵

11/10 = (1 + r)⁵

1.01924 = 1 + r

r = 0.019245

Step 3: Convert to percentage

0.019245 × 100 = 1.92449%