Question

If the simple interest on ​$7 comma 000 for 7 years is ​$3 comma 920​, then what is the interest​ rate?
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Part 1
The rate is
  
enter your response here​%.

Answer 1

To find the interest rate when you have the principal amount, the simple interest, and the time, you can use the formula for simple interest:

\[
I = P \times r \times t
\]

Where:
- \(I\) = simple interest
- \(P\) = principal amount (initial investment)
- \(r\) = interest rate (as a decimal)
- \(t\) = time (in years)

Given:
- \(I = 3920\)
- \(P = 7000\)
- \(t = 7\)

We need to find \(r\). Rearranging the formula to solve for \(r\):

\[
r = \frac{I}{P \times t}
\]

Substituting the values:

\[
r = \frac{3920}{7000 \times 7}
\]

Calculating the denominator:

\[
7000 \times 7 = 49000
\]

Now substituting this back into the equation for \(r\):

\[
r = \frac{3920}{49000}
\]

Calculating \(r\):

\[
r = 0.08
\]

To convert this to a percentage, multiply by 100:

\[
r = 0.08 \times 100 = 8\%
\]

Thus, the interest rate is **8%**.