Question 1118762: If P1,000 accumulates to P1,500 when invested at a simple interest for three years, what is the annual rate of interest?
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the formula for simple interest is i = p * r * n.
if p accumulates to 1500 from 1000, then i = 1500 - 1000 = 500.
when n = 3 years, the formula becomes:
500 = 1000 * r * 3
solve for r to get r = 500 / 1000 / 3 = .1667 per year rounded to 4 decimal places, or r = 16.67% per year rounded to 2 decimal places.
a more exact value would be i = 1/6 per year or r = (100/6)% per year.
take 1000 and multiply it by 1/6 * 3 and you get 1000 * 1/2 = 500.
that's your interest.
the annual rate of interest is (100/6)% per year, or 16.67% per year rounded to 2 decimal places.
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