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Mike deposited $4,000 in a savings account with simple interest. Two years later, he had earned $1,200 in interest. What was the interest rate?
Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.
_____ %
To find the interest rate, we can use the formula:
[ i = prt ]
Where:
– ( i ) = interest earned = $1,200
– ( p ) = principal = $4,000
– ( r ) = interest rate (as a decimal)
– ( t ) = time in years = 2
First, we can rearrange the formula to solve for ( r ):
[ r = frac{i}{pt} ]
Substituting the known values into the formula:
[ r = frac{1200}{4000 times 2} ]
Now calculate the denominator:
[ 4000 times 2 = 8000 ]
So, now we calculate:
[ r = frac{1200}{8000} = 0.15 ]
To express ( r ) as a percentage, we multiply by 100:
[ r = 0.15 times 100 = 15% ]
Therefore, the interest rate is 15%.