The annual interest rate is 6.2%.
Solution:
Given data:
Interest = $310
Principle = $1000
Time = 5 years
To find the annual interest rate:
Simple Interest formula:
[tex]$S.I=\frac{PRT}{100}[/tex]
Substitute the given values in the formula, we get
[tex]$310=\frac{1000\times R \times5}{100}[/tex]
Do cross multiplication.
[tex]$310 \times 100=1000\times R \times5[/tex]
Divide both sides of the equation by 1000, we get
[tex]$\frac{310 \times 100}{1000}=\frac{1000\times R \times5}{1000}[/tex]
[tex]31=R\times 5[/tex]
Divide by 5 on both sides of the equation, we get
[tex]$\frac{31}{5}=\frac{R\times 5}{5}[/tex]
[tex]6.2=R[/tex]
R = 6.2%
Hence the annual interest rate is 6.2%.
