What simple interest rate will Susan need to secure to make $2,500 in interest on a $10,000 principal over 5 years? how would i figure this out?
I = PRT
2,500 = 10,000 * R * 5
2,500 = 50,000 * R
2,500 / 50,000 = R
0.05 = R
The rate is 5%
To determine the simple interest rate, you need to use the formula for simple interest:
Simple Interest (I) = Principal (P) * Rate (R) * Time (T)
From the given information, we know:
Principal (P) = $10,000
Interest (I) = $2,500
Time (T) = 5 years
Let's substitute these values into the formula:
$2,500 = $10,000 * R * 5
Now, let's simplify the equation and solve for the rate (R):
Divide both sides of the equation by $50,000 (10,000 * 5):
$2,500 / $50,000 = R
0.05 = R
To express R as a percentage, multiply it by 100:
R = 0.05 * 100
R = 5
Therefore, Susan would need to secure a simple interest rate of 5% to make $2,500 in interest on a $10,000 principal over 5 years.