Question

Find the rate if Randy invested a principal of $\$700$, and earned $\$196$ as the simple interest in 4 years.
%

Answer 1

Let, R = Rate of interest expressed in %

Given, P = Principal (starting amount) $=\$700$
T = Time period = 7 years
and Simple Interest $=\$196$

$\because \text{Simple Interest}=\frac{PRT}{100}$
$\Rightarrow 196=\frac{700\times R\times 7}{100}$

On simplifying, we get
$196=7\times 7\times R$
$\Rightarrow 196=49\times R$

Dividing both the sides by $49,$ we get
$\frac{196}{49}=R$

Simplify and cancel the common factors, we get
$R=\frac{7\times 7\times 4}{7\times 7}$
$\Rightarrow R=4$

Hence, rate of interest is 4%.