A principal of $5000 was invested in a savings account for 4 years. If the interest earned for the period was $400, what was the interest rate?
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To find the interest rate, we can use the formula:
Interest = Principal * Rate * Time
In this case, the principal (P) is $5000, the interest earned (I) is $400, and the time (T) is 4 years.
Rearranging the formula, we get:
Rate = Interest / (Principal * Time)
Plugging in the given values:
Rate = $400 / ($5000 * 4)
Simplifying:
Rate = $400 / $20,000
Rate = 0.02 or 2%
Therefore, the interest rate for this savings account is 2%.