Question

What annual simple interest rate will increase Jacob Davidson's initial investment of $5,000 to $6,000 in two years? (Hint: Use the formula I = prt and substitute known values to find I.)

Answer 1

Answer: r=10%

Step-by-step explanation:

1. You have that Jacob Davidson's initial investment of $5,000 to $6,000 in two years. Therefore, you must solve for $r$ in the given formula:

$I=prt\\r=\frac{I}{pt}$

Where I is the interest, p is the principal invested, r is the interest rate and t is the time in years.

2. Substitute values and solve:

$r=\frac{1,000}{(5,000)(2)}\\r=0.1$

$r=10$%