rachel invested $5000 in a fund for 3 years and was paid simple interest. the total interest that she…

rachel invested $5000 in a fund for 3 years and was paid simple interest. the total interest that she received on the investment was $450. as a percentage, what was the annual interest rate of her investment? if necessary, refer to the list of financial formulas.

rachel invested $5000 in a fund for 3 years and was paid simple interest. the total interest that she received on the investment was $450. as a percentage, what was the annual interest rate of her investment? if necessary, refer to the list of financial formulas.

Answer

Explanation:

Step1: Recall simple - interest formula

The simple - interest formula is $I = Prt$, where $I$ is the interest, $P$ is the principal amount, $r$ is the annual interest rate (in decimal form), and $t$ is the time in years. We know that $I = 450$, $P = 5000$, and $t = 3$. We need to solve for $r$.

Step2: Rearrange the formula to solve for $r$

Starting with $I = Prt$, we can isolate $r$ by dividing both sides of the equation by $Pt$. So, $r=\frac{I}{Pt}$.

Step3: Substitute the given values into the formula

Substitute $I = 450$, $P = 5000$, and $t = 3$ into the formula: $r=\frac{450}{5000\times3}$. First, calculate the denominator: $5000\times3 = 15000$. Then, calculate $r$: $r=\frac{450}{15000}=0.03$.

Step4: Convert the decimal to a percentage

To convert a decimal to a percentage, multiply by 100. So, $r = 0.03\times100 = 3%$.

Answer:

$3%$