SOLUTION: Can you please help me solve the problem...instructions...a principal of $5000 was invested in a savings account for 4 years...if the interest earned for the period was $400, what

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Question 71019: Can you please help me solve the problem...instructions...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?
Found 2 solutions by stanbon, mathman409:
Answer by stanbon(75887) (Show Source):
You can put this solution on YOUR website!
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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Assuming the investment was at "simple interest" you get:
Interest = 4Pr
400 = 4(5000)r
100 = 5000r
r = 2%
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Cheers,
Stan H.

Answer by mathman409(67) (Show Source):
You can put this solution on YOUR website!
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?
after the end of the first year, he gets 5000(1+x).
after the end of the second year, he gets 5000(1+x)^2 (total).
after the end of the third year, he gets 5000(1+x)^3 (total).
after the end of the fourth year, he gets 5000(1+x)^4 (total).
5000(1+x)^4=5400
(1+x)^4=54/50
1+x=1.019
x=0.02
x=2%
so the interest rate is 2%
check
left side (1+x)^4=(1+0.02)^4=1.02^4=1.08
right side 54/50=1.08
1.08=1.08