At what rate would u need to invest $25000 to earn $5000 in 2 years?

Question

At what rate would u need to invest $25000 to earn $5000 in 2 years?

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Samantha 2 days 2021-10-12T06:38:16+00:00 1 Answer 0

Answers ( )

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    2021-10-12T06:40:05+00:00

    Answer:

    The appropriate interest rate would be 10%.

    Step-by-step explanation:

    Without further info I must assume that you want “simple interest” on the $25000 principal.  The appropriate formula for simple interest is:

    i = p*r*t, where p is the principal amount, r is the interest rate as a decimal fraction, and t is the time in years.

                                                                                                        i

    We want the rate, r, so we solve this equation for r:    r = ————-

                                                                                                       p*t

    Now we’re in a position to substitute the known values of i, p and t and to calculate r from them:

                $5000                   1

    r = ———- ————- = ————— = 0.10  

         ($25000)(2 yrs)            10

    The appropriate interest rate would be 10%.

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