A retired couple invested $8000 in bonds. At the end of one year, they received an interest payment of $584. What was the simple interest rate of the bonds?
For simple interest, we have:
Balance * interest rate = Interest payment
8000i = 584
Divide each side of the equation by 8000 to isolate i:
8000i/8000 = 584/8000
Cancelling the 8000's on the left side, we get:
i = 0.073
Most times, interest rates are expressed as a percentage.
Percentage interest = Decimal interest * 100%
Percentage interest = 0.073 * 100%
Multiplying by 100 is the same as moving the decimal point two places right:
Percentage interest = 7.3%
For simple interest, we have:
Balance * interest rate = Interest payment
8000i = 584
Divide each side of the equation by 8000 to isolate i:
8000i/8000 = 584/8000
Cancelling the 8000's on the left side, we get:
i = 0.073
Most times, interest rates are expressed as a percentage.
Percentage interest = Decimal interest * 100%
Percentage interest = 0.073 * 100%
Multiplying by 100 is the same as moving the decimal point two places right:
Percentage interest = 7.3%