Q:

If $1600 earned simple interest of $56.24 in 2 months, what was the simple interest rate? The simple interest rate is % (Do not round until the final answer. Then round to the nearest tenth as needed.)

Accepted Solution

A:
Answer:The interest rate is of 21.09% a year.Step-by-step explanation:This is a simple interest problem.The simple interest formula is given by:[tex]E = P*I*t[/tex]In which E are the earnings, P is the principal(the initial amount of money), I is the interest rate(yearly) and t is the time.So, for our problem, we have:If $1600 earned simple interest of $56.24 in 2 months, so:[tex]P = 1600, E = 56.24[/tex]. The interest value is a yearly value, however the time is given in months. This means that we have to divide the time by 12(that is the number of months in a year). So[tex]t = \frac{2}{12} = \frac{1}{6}[/tex]Solution:[tex]56.24 = 1600*I*\frac{1}{6}[/tex][tex]1600I = 6*56.24[/tex][tex]1600I = 337.44[/tex][tex]I = \frac{337.44}{1600}[/tex][tex]I = 0.2109[/tex]The interest rate is of 21.09% a year.