If the principal P = $700, the interest I = $504, and time t = 6 years, find the following.
(a) What is the rate?
%
(b) What is the future value?
To find the rate and the future value, we can use the formula for simple interest:
I = P * r * t
where:
I is the interest,
P is the principal,
r is the rate, and
t is the time (in years).
(a) To find the rate (r), we rearrange the formula:
r = I / (P * t)
Substituting the given values:
r = $504 / ($700 * 6)
Calculating this expression gives:
r = 504 / 4200
r ≈ 0.12
So, the rate is approximately 12%.
(b) To find the future value, we can use the formula:
F = P + I
where:
F is the future value.
Substituting the given values:
F = $700 + $504
F = $1204
Therefore, the future value is $1204.