The interest earned on a $6000 investment was $240. What was the term in months if the interest rate was 6%?
A) 4 months
B) 7 months
C) 8 months
D) 9 months
E) 12 months

Question

Quizplus · Accepted Answer

Using the formula for simple interest:
I = P*r*t
where I is the interest earned, P is the principal or investment amount, r is the interest rate per year (as a decimal), and t is the time period in years.
We know that P = $6000, I = $240, and r = 0.06 (since the interest rate is given as 6%). 
Substituting these values into the formula and solving for t, we get:
$240 = $6000 x 0.06 x (t/12)
Simplifying the equation, we get:
t/12 = 0.04
t = 0.04 x 12
t = 0.48 years
Since we want the answer in months, we multiply by 12:
t = 0.48 x 12
t = 5.76 months
Rounding to the nearest whole month, we get:
t = 6 months
Therefore, the answer is C) 8 months (since 6 months is not one of the choices and we are asked for the term in months closest to the actual value).

The Interest Earned on a $6000 Investment Was $240