Question

After 1 year, $60,000 deposited in a savings account with simple interest had earned $1,200 in interest. What was the interest rate?

Use the formula i = prt, where i is the interest earned, p is the principal (starting amount), r is the interest rate expressed as a decimal, and t is the time in years.

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Answer 1

To find the interest rate \( r \), we can use the formula for simple interest:

\[
i = prt
\]

where:
- \( i \) is the interest earned,
- \( p \) is the principal (starting amount),
- \( r \) is the interest rate expressed as a decimal,
- \( t \) is the time in years.

From the given information:
- \( i = 1200 \) (the interest earned),
- \( p = 60000 \) (the principal),
- \( t = 1 \) year.

Now, we can plug in these values into the formula and solve for \( r \):

\[
1200 = 60000 \cdot r \cdot 1
\]

This simplifies to:

\[
1200 = 60000r
\]

Next, we isolate \( r \) by dividing both sides by 60000:

\[
r = \frac{1200}{60000}
\]

Calculating the right side gives:

\[
r = 0.02
\]

To express the interest rate as a percentage, we multiply by 100:

\[
r = 0.02 \times 100 = 2\%
\]

Therefore, the interest rate is:

\[
\boxed{2\%}
\]