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Question

Rita invested $5,000 in a fund for 6 years and was paid simple interest.

The total interest that she received on the investment was $600.

The annual interest rate of her investment was 2%.

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Note: I just recently asked for help on a similar math problem, which helped me out, so thank you to this user. I tried applying the same method to this problem, which didn't work- (time in years) (interest/principal), which gave me 0.72. So I (incorrectly) entered 72% as my answer

Puzzling · Accepted Answer

The formula for simple interest is:

I = Prt

P : original principal (5000)
r : annual rate, as a decimal
t : time in years

600 = 5000 * r * 6
600 = 30000r
r = 600/30000
r = 6/300
r = 2/100
r = 0.02 (or 2%)

? · Answer

Let r be the annual simple interest rate, then
$5000(r)*6=$600
=>
r=600/(6*5000)=0.02
=>
r=0.02(100)%=2%

Wayne DeguMan · Answer

When simple interest is calculated, the amount stays the same each year.

so, $600 over 6 years => $100 per year

i.e. 100/5000 => 1/50 = 0.02

Hence, 2% p.a.

:)>

Jeff Aaron · Answer

($600/$5000)/6 = 0.02 = 2%

Krishnamurthy · Answer

Rita invested $5,000 in a fund for 6 years and was paid simple interest. 
The total interest that she received on the investment was $600. 
The annual interest rate of her investment was 2%.

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Another finance math homework problem, needing help?

5 Answers