Question

After 5 years, $40,000 deposited in a savings account with simple interest had earned $20,000 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.

%__

Answer 1

To find the interest rate \( r \) using the formula \( i = prt \), we need to rearrange the formula to solve for \( r \):

\[
r = \frac{i}{pt}
\]

Given:
- \( i = 20,000 \) (interest earned)
- \( p = 40,000 \) (principal)
- \( t = 5 \) (time in years)

Now, substitute the given values into the equation:

\[
r = \frac{20,000}{40,000 \times 5}
\]

Calculate the denominator:

\[
40,000 \times 5 = 200,000
\]

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

\[
r = \frac{20,000}{200,000}
\]

Now calculate \( r \):

\[
r = 0.1
\]

To convert \( r \) into a percentage:

\[
r = 0.1 \times 100 = 10\%
\]

Thus, the interest rate is:

\[
\boxed{10\%}
\]