You invest $5,000 in an account simple interest. The balance after 6 years is $6,200. What is the interest rate?

Question

i understand how to do simple interest i just  don't understand this question. how are you soppused to find the interest rate?

 

 

 

Answer 1

At simple interest is $1,200 over 6 years or $200.00 per year.  $200.00 divided by $5,000 is 2/50, 1/25 or 4% 

Answer 2

From the simple interest equation, I=PRT, you're solving for R.  The answer will be in decimal form.  Multiply by 100 to get the percent interest.  First though, I is not the total amount you have after 6 years ($6200) but the amount you earned ($1200).

 

1200 = 5000 * R * 6

1200 = 30000 * R

R = 0.04 or 4%