Question

After 4 months, $600,000 deposited in a savings account with simple interest had earned $8,400 in interest. What was the interest rate?

Answer 1

the simple interest formula is

$I=Prt$

where I is the interest, P the principa, r the rate and t the time.

We know that,

$\begin{gathered} P=600000 \\ I=8400 \\ t=\frac{1}{3} \end{gathered}$

hence,

$\begin{gathered} r=\frac{I}{Pt} \\ \text{then} \\ r=\frac{8400}{(60000)(\frac{1}{3})} \\ r=\frac{8400}{200000} \\ r=0.042 \end{gathered}$

In other words r=4.2%