Question

If $3000 grows to $3480 in 4 years, find the simple interest rate

Answer 1

Formula of simple interest rate is:

$A=P(1+rt)$

Where,

$\begin{gathered} A=\text{ final amount} \\ P=\text{ initial principal anount} \\ r=\text{rate} \\ t=\text{time} \end{gathered}$

So the interest rate is:

$\begin{gathered} 3480=3000(1+r\times4) \\ \frac{3480}{3000}=1+4r \\ 1.16=1+4r \\ 4r=1.16-1 \\ 4r=0.16 \\ r=0.04 \end{gathered}$

So the simple interest rate is:

$\begin{gathered} 0.04\times100 \\ =4 \end{gathered}$

4% interest rate.