SOLUTION: A principal of $5000 was invested in a savings account for 4 years. If the interest earned for the period was $400, what was the interest rate?

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Question 39420: A principal of $5000 was invested in a savings account for 4 years. If the interest earned for the period was $400, what was the interest rate?
Answer by fractalier(1829) About Me  (Show Source):
You can put this solution on YOUR website!
Assuming that the interest was not compounded, we can say that if $400 was earned over 4 years, the interest was $100 each year. Now we have
I = PRT
for the formula for simple interest...now plug in and solve for r...
100 = 5000(r)(1)
r = .02 = 2% per year