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9 May, 01:28

Alice earned interest of $120 from an investment of $1000 for two years. What is the rate of simple interest per year what does this mean

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  1. 9 May, 01:55
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    Rate of simple interest per year = 6%

    It means that every year an amount equal to simple interest per year times of investment is earned by the investor.

    Explanation:

    We have I = prt, where I represents simple interest, p represents principal, r represents interest rate, and t represents time in years.

    Here principal, p = 1000 $

    Number of years, t = 2 years

    Interest received, I = 120$

    We need to find rate of interest.

    Substituting

    120 = 1000 x r x 2

    r = 120/2000 = 0.06 = 6%

    Rate of simple interest per year = 6%

    It means that every year an amount equal to simple interest per year times of investment is earned by the investor.
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