In a interest rate problem, when your given the interest, time, and principal, how do you find the rate?

Question

The question is: Find Rate if Interest=250 Principal=2,000 Time=2 years

Answer 1

Since the question is asking about simple interest you want to start with the simple interest formula

Interest = Principal x Rate x Time

then rearrange to solve for the Rate

Rate = Interest / (Principal x Time)

For this set of values that means taking

Rate = 250 / (2000 * 2) = 250 / 4000 = 0.0625

Meaning that the corresponding interest rate for this scenario is 6.25%

Answer 2

So you probably know the following formula:

 

 

I = p • r • t

 

So , just plug in the values that you have and solve for r

 

250 = 2000 • r • 2

 

multiply the 2000 times 2

 

250 = 4000 • r

 

divide both sides by 4000 to get r by itself

 

Thus,

 

.0625 = r

 

Therefore, the rate is 6.25%  (you multiply the decimal answer by 100 to make it a percentage)

 

 

Bill

 

El Paso, TX