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16 May, 22:29

Mariska was comparing her options for investment. One choice she was looking at showed that her principal of $1,875 over 10 years would earn $1,125 in interest giving her a total of $3,000 at the end of the investment period. What interest rate is being used to calculate this investment?

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  1. 16 May, 22:32
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    Answer: 6%

    Step-by-step explanation:

    Principal = $1875

    Time = 10 years

    Interest = $1125

    Rate = Unknown

    Recall that,

    Interest = (Principal*Rate*Time) / 100

    I = PRT/100

    100I = PRT

    R = (100*I) / PT

    Rate = (100 * 1125) / (1875 * 10)

    Rate = 112500/18750

    Rate = 6%

    The rate is 6%
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