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girlongixxer
07-02-2006, 11:14 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, 11:20 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, 11:22 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, 11:55 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
07-03-2006, 12:03 AM
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, 10:45 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, 11:11 AM
...assuming it was a simple interest accumulation. The problem statement should provide better information.

Denis
07-03-2006, 01:31 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, 09:41 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.