Charlie has been saving part of his salary each month. He invests £6000.00 at a simple interest rate of r% each year.
After 6 years the value of Charlie’s investment is £7170.00
Find the value of r.
Answer:
Formula for simple interest:
A = P(1+rt)
Where:
A = Final amount
P = Principal at start
r = Interest rate
t = Time
So:
7170 = 6000 (1 + 6r)
7170 = 6000 + 36000r
r = 1170/36000 = 0.0325 = 3.25%