Jennifer earned $249.60 in 6 1/2 years on a $640 investment. What was the simple interest rate?
To calculate the simple interest rate, we can use the formula:
Simple Interest = Principal × Rate × Time
Let's substitute the given values:
Principal = $640
Time = 6.5 years
Simple Interest = $249.60
We need to solve for the interest rate. Rearranging the formula, we have:
Rate = Simple Interest / (Principal × Time)
Substituting the given values, we get:
Rate = $249.60 / ($640 × 6.5)
Rate = $249.60 / $4160
To simplify, we divide the numerator and denominator by 10:
Rate = $24.96 / $416
Now, we can calculate the interest rate:
Rate = 0.059808
To express the rate as a percentage, we multiply by 100:
Rate = 5.9808%
Therefore, the simple interest rate in this case is approximately 5.9808%.
To find the simple interest rate, we can use the formula: Simple Interest = Principal * Rate * Time.
In this case, the principal (initial investment) is $640, and the time is 6 1/2 years.
To convert the time to a decimal, we need to find the equivalent fraction for 1/2. Since 1/2 is the same as 0.5, we have:
Time = 6 + 0.5 = 6.5 years
Now we can plug in the values we have into the formula:
$249.60 = $640 * Rate * 6.5
To isolate the variable Rate, we need to divide both sides of the equation by $640 * 6.5:
Rate = $249.60 / ($640 * 6.5)
Rate = $249.60 / $4160
Calculating this, we find:
Rate ≈ 0.0599 or 5.99%
Therefore, the simple interest rate is approximately 5.99%.
I = PRT
249.6 = 640 * R * 6.5
249.6 = 4,160R
0.06 = 6% = R