View Full Version : Interest Rate Word Problem

girlongixxer

07-02-2006, 10:14 PM

A principal of $5000 was invested in a savings account for 4 years. If the interest earned for the period was $400, what was the interest rate?

Could someone show me how to work this?

stapel

07-02-2006, 10:20 PM

Is this simple or compound interest? What formula did they give you to use? How far have you gotten in applying that formula?

Thank you.

Eliz.

girlongixxer

07-02-2006, 10:22 PM

Is this simple or compound interest? What formula did they give you to use? How far have you gotten in applying that formula?

Thank you.

Eliz.

It is simple and I was dividing 400 into 1000 but I drew a blank.

stapel

07-02-2006, 10:55 PM

I was dividing 400 into 1000 but I drew a blank.

I'm sorry, but I'm not seeing how "1000" is coming into play...?

Please reply with the formula(s) you are using, and a clear listing of your steps. Thank you.

Eliz.

girlongixxer

07-02-2006, 11:03 PM

I was dividing 400 into 1000 but I drew a blank.

I'm sorry, but I'm not seeing how "1000" is coming into play...?

Please reply with the formula(s) you are using, and a clear listing of your steps. Thank you.

Eliz.

oops I meant to say 5000 but i think i figured it out. i got:

Interest was $100/year so divide $5000 into $100 to get 2%

jonboy

07-03-2006, 09:45 AM

Yes you are correct. :D 8-)

Definition of Simple Interest (http://www.freemathhelp.com/forum/posting.php?mode=reply&t=15410): I=Prt

Given: 400=(5000)r(4)

Subsitution: 400=20,000r

Division Property: .02\Rightarrow2%

So r=2%

Good Job!

tkhunny

07-03-2006, 10:11 AM

...assuming it was a simple interest accumulation. The problem statement should provide better information.

Denis

07-03-2006, 12:31 PM

Agree with TK; the way it's worded, answer is:

1.94265~% cpd annually, resulting in a 2% yield after 4 years....

jonboy

07-06-2006, 08:41 AM

...assuming it was a simple interest accumulation. The problem statement should provide better information.

It is simple and I was dividing 400 into 1000 but I drew a blank.

Powered by vBulletin® Version 4.2.2 Copyright © 2014 vBulletin Solutions, Inc. All rights reserved.