Principal of $600 is invested at 3.6% /a simple interest, paid annually, for 12 years. What is the rate of return?
A) 43.2% B) 21.6% C. 7.2% D) 0.6%
S.I. = P * R * T
= 600 * 0.036 * 12
= 259.2
Rate of interest = (S.I/P)*100
= (259.2/600)*100
= 43.2%
To find the rate of return, we can use the simple interest formula:
Simple Interest = Principal * Rate * Time
Given:
Principal = $600
Rate = 3.6% (0.036 in decimal form)
Time = 12 years
Substituting the given values into the formula, we have:
Simple Interest = $600 * 0.036 * 12
Now we can calculate the simple interest:
Simple Interest = $259.20
To find the rate of return, we can divide the simple interest by the principal and multiply by 100:
Rate of Return = (Simple Interest / Principal) * 100
Rate of Return = ($259.20 / $600) * 100
Rate of Return ≈ 43.2%
Therefore, the rate of return is approximately 43.2%.
The correct answer is A) 43.2%.