What was the annual simple interest rate of an account if it started off with ₱20,000 and became ₱22,400 after 4 years?1 pointA. 1.5%B. 3%C. 4.5%D. 6%
Question
What was the annual simple interest rate of an account if it started off with ₱20,000 and became ₱22,400 after 4 years?1 pointA. 1.5%B. 3%C. 4.5%D. 6%
Solution
To solve this problem, we need to use the formula for simple interest which is I = PRT, where I is the interest, P is the principal amount, R is the rate, and T is the time.
In this case, we know the following:
- The principal amount (P) is ₱20,000.
- The total amount after 4 years is ₱22,400, so the interest (I) is ₱22,400 - ₱20,000 = ₱2,400.
- The time (T) is 4 years.
We need to find the rate (R), so we rearrange the formula to solve for R: R = I / (PT).
Substituting the known values, we get: R = ₱2,400 / (₱20,000 * 4) = 0.03 or 3%.
So, the annual simple interest rate of the account was 3%. The answer is B. 3%.
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