ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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To solve the problem of determining the interest rate, we can use the formula for simple interest:

Simple Interest = Principal x Rate x Time

Given:
- Simple Interest = $500
- Principal = $10,000
- Time = 5 years

We need to find the Rate (R).

Rearranging the formula to solve for Rate gives us:

Rate = Simple Interest / (Principal x Time)

Substitute the given values into the equation:

Rate = $500 / ($10,000 x 5)
Rate = $500 / $50,000
Rate = 0.01

To express the rate as a percentage, convert it by multiplying by 100:

Rate = 0.01 x 100 = 1%

Therefore, the interest rate charged was 1%.
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Transcribed Image Text:To solve the problem of determining the interest rate, we can use the formula for simple interest: Simple Interest = Principal x Rate x Time Given: - Simple Interest = $500 - Principal = $10,000 - Time = 5 years We need to find the Rate (R). Rearranging the formula to solve for Rate gives us: Rate = Simple Interest / (Principal x Time) Substitute the given values into the equation: Rate = $500 / ($10,000 x 5) Rate = $500 / $50,000 Rate = 0.01 To express the rate as a percentage, convert it by multiplying by 100: Rate = 0.01 x 100 = 1% Therefore, the interest rate charged was 1%.
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