Question

use the simple interest formula to solve for the missing values below:

Answer 1

SOLUTION

The simple Interest formula is given as

$I=\frac{p\times r\times t}{100}$

Where I = the simple interets = $2500

p = principal, that is money invested = $5000

r = interet rate = ?

t = time in years = 10 years

So, this means that we are to find r, the interet rate

From the formula

$I=\frac{p\times r\times t}{100}$

We will make r the subject. That is make it stand alone, this becomes

$\begin{gathered} I=\frac{p\times r\times t}{100} \\ p\times r\times t=100I \\ \text{prt = }100I \\ \text{divide through by p and t} \\ \frac{prt}{pt}=\frac{100I}{pt} \\ \\ r=\frac{100I}{pt} \end{gathered}$

Inputing the values we have

$\begin{gathered} r=\frac{100I}{pt} \\ r=\frac{100\times2500}{5000\times10} \\ r=\frac{250000}{50000} \\ r=5\text{percent } \end{gathered}$

Therefore, r = 5%