Alana has $2000 to invest in a savings account that pays simple interest. She would like to leave the money in the account for 3 years and earn an additional $150. What interest rate, # I = Prt#, must the bank pay in order for Alana to earn this amount?

1 Answer
Serena D.
Jan 8, 2018

The interest rate in the formula provided is r, so we must set up an equation to find that variable.

Explanation:

She has an original amount (the principal, the p variable) as $2000. The time, in years, (the t variable) is 3. The final amount of interest earned (the i variable) is $150. Thus, set up an equation as follows:

#150=2000*r*3#

Solve the equation for r

#150=6000r rarr# Multiply the 2000 and 3

#r=0.025 rarr# Divide each side by 6000

Since interest rates are usually expressed in percentages, we need to convert the 0.025 to a percentage. 0.025 would be equivalent to 2.5%, or #2.5/100#

Thus, the interest rate must be at least 2.5%

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