You invested $4000 in a fund for 2 years and was paid simple interest. The total interest that you received on the investment was $320. As a percentage, what was the annual interest rate of your investment?
I = PRT
320 = 4,000 * I * 2
320 = 8,000 I
320/8,000 = I
? = I
(320/2)/4000 * 100 = ? %
I = P*r*t = 320.
4000 * r * 2 = 320,
r = 320/8000 = 0.04 = 4%.
To calculate the annual interest rate of your investment, we need to use the formula:
Interest = Principal * Rate * Time
In this case, we know the principal (P) is $4000, the time (T) is 2 years, and the interest (I) is $320. We need to find the rate (R).
Let's rearrange the formula to solve for R:
R = I / (P * T)
Substituting the given values:
R = 320 / (4000 * 2)
R = 320 / 8000
R = 0.04
To convert this decimal to a percentage, multiply it by 100:
Annual interest rate = 0.04 * 100
Annual interest rate = 4%
Therefore, the annual interest rate of your investment is 4%.