Answer:
Interest rate (r ) = 0.035 or 3.5%
Step-by-step explanation:
Given the principal amount of $1,800, and an interest payment of $378 earned in 6 years:
Use the simple interest formula and algebraically solve for variable, interest rate, r :
I = P × r × t
Where:
I = interest payment = $378
P = principal amount = $1,800
t = time (in years) = 6
r = interest rate
Divide both sides by P × t to isolate r :
[tex]\displaytext\sf{\frac{I}{P\:\times\:t}\:=\:\frac{P\:\times\:r\:\times\:t}{P\:\times\:t}}[/tex]
[tex]\displaytext\sf{interest\:rate\:(r)\:=\:\frac{I}{P\:\times\:t}}[/tex]
Substitute the given values into the formula for the interest rate:
[tex]\displaytext\sf{interest\:rate\:(r)\:=\:\frac{378}{1800\:\times\:6}\:=\:\frac{378}{10800}}[/tex]
Interest rate (r ) = 0.035 or 3.5%
Therefore, the interest rate is 3.5%.
