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30 August, 19:35

Mia has an investment that is worth $12,000 after 4 years. If the initial investment was $8,000, what is the annual simple interest rate?

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  1. 30 August, 23:07
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    Answer: 12.5 %

    Explanation:

    Hi, to answer this question we have to apply the simple interest formula:

    I = p x r x t

    Where:

    I = interest (investment after interests - principal; 12000-8000=4000)

    P = Principal Amount (initial invest)

    r = Interest Rate (decimal form)

    t = time

    Replacing with the values given

    4,000 = 8,000 (x) 4

    Solving for x:

    4,000 = 32,000x

    4,000 / 32,000 = x

    x = 0.125

    Since the interest rate is in decimal form, we have to multiply it by 100 to obtain the percentage.

    0.125 x 100 = 12.5 %

    Feel free to ask for more if needed or if you did not understand something.
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