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A principal of $5000.00 was invested in a saving account 4 years. if the interest earned for the period wass $400.00 what was the interest rate?
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To determine the interest rate, we need to use the formula for simple interest:
Simple Interest = Principal x Interest Rate x Time
In this case, we have the following information:
Principal = $5000.00
Interest = $400.00
Time = 4 years
Substituting the given values into the formula, we get:
$400.00 = $5000.00 x Interest Rate x 4
Now, let's solve for the interest rate:
Divide both sides of the equation by $5000.00 x 4:
$400.00 ÷ ($5000.00 x 4) = Interest Rate
Simplifying the equation:
$400.00 ÷ $20,000.00 = Interest Rate
0.02 = Interest Rate
To express this as a percentage, we multiply by 100:
0.02 x 100 = 2%
Therefore, the interest rate is 2%.