Question: George earned $16 as simple interest on $800 for 3 months. Find the yearly rate of interest.
A ) 7% B ) 10% C ) 9% D ) 8%
Steps to derive
1 The rate of interest is calculated by the formula, R = IPT, where I is the interest, P is the principal amount and T is the intersest period and R is the interest rate.
[Substitute I with 16, P with 800 and T with 0.25.] 2 R = 16800×0.25
