Question

If the amount of simple interest earned on a principal amount of $ 480 over 7 years was $ 100.80 comma what was the interest rate?

Answer 1

Using simple interest, it is found that the interest rate was of 3%.

The amount of simple interest generated after t years is given by:

$I = Prt$

In which:

• P is the principal amount.
• r is the interest rate.

In this problem:

• Principal of $480, hence $P = 480$.
• Earned $100.80, hence $I = 100.8$
• 7 years, hence $t = 7$.

Then, we solve the equation of simple interest for r.

$I = Prt$

$100.8 = 480(7)r$

$r = \frac{100.8}{480(7)}$

$r = 0.03$

The interest rate was of 3%.

A similar problem is given at https://brainly.com/question/13176347