Question

You give your dad $500 at the end of every year for the next 10 years to save for you. At the end of the 10 years, he gives you $8,000! What rate of interest did your dad pay you?

Answer 1

This sounds like a simple interest problem

I = PRT

'I' = interest earned = what father gave you - what you gave him
'P' = principal rate = original rate = 500
'R' = rate (what we want to solve for)
'T' = time ( in years)

We want to solve for R so...rearrange this for R

\[R = \frac{ I }{ PT }\]

We know I = 8000 - (500 * 10) = 3000
T = 10 years
P = 500 dollars so

\[R = \frac{ 3000 }{ 500 * 10 }\]

What does R = ...?

Answer 2

R=.6, So it would be at a 60% interest rate?

Answer 3

That would be correct!

Answer 4

thank you!

Answer 5

No problem!