Thinking Mathematically (6th Edition)

Published by Pearson
ISBN 10: 0321867327
ISBN 13: 978-0-32186-732-2

Chapter 8 - Personal Finance - 8.3 Simple Interest - Exercise Set 8.3: 33

Answer

The simple interest rate is 21.4%

Work Step by Step

This is the formula we use when we make calculations with simple interest: $A = P~(1+rt)$ $A$ is the future value $P$ is the present value $r$ is the interest rate $t$ is the number of years We can find the simple interest rate $r$. $A = P~(1+rt)$ $rt = \frac{A}{P}-1$ $r = \frac{\frac{A}{P}-1}{t}$ $r = \frac{\frac{\$2000}{\$1400}-1}{2}$ $r = 0.214 = 21.4\%$ The simple interest rate is 21.4%
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