If the interest accumulated on a principal amount of $5,000 at the end of a year is $400, the annual rate of interest must be
A)4%.
B)6%.
C)8%.
D)20%.

Question

​If the interest accumulated on a principal amount of $5,000 at the end of a year is $400, the annual rate of interest must be
A)​4%.
B)​6%.
C)​8%.
D)20%.

Quizplus · Accepted Answer

We can use the formula:

Interest = Principal x Rate x Time

Where Principal = $5,000, Time = 1 year, and Interest = $400.

Substituting these values, we get:

$400 = $5,000 x Rate x 1

Solving for Rate, we get:

Rate = $400 / $5,000

Rate = 0.08 or 8%

Therefore, the annual rate of interest must be 8%, which is Choice C.

​If the Interest Accumulated on a Principal Amount of $5,000

If the Interest Accumulated on a Principal Amount of $5,000