Use the simple interest formula I=Prt, where I is the interest, P the principal, r the annual interest rate, and t the time in years.
2%
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If we borrow money from a bank, we pay the bank interest for the use of their money. Similarly, if we open a savings account, the bank deposits extra money on this account as interest. To calculate the interest I, we use the simple interest formula.
I= P r t, where...
I& = Interest
P& = Principal
r& = Annual interest rate
t& = Time (in years)We know that we deposit $350 in a savings account with we earn $17.50 simple interest in 2.5 years. We want to calculate the annual rate.
P= 350, I= 17.5, t= 2.5
To calculate the interest, we will substitute these values into the simple interest formula and solve the resulting equation for r.
