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You are offered an investment that pays simple interest and will earn $200 interest on a $2000 investment over 5 years. What interest rate is the investment paying? A) 1.5% B) 2% C) 2.5% D) 3%

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sqdancefan

Answer:

  B)  2%

Step-by-step explanation:

The simple interest formula is ...

  I = Prt

Interest I is earned on principal P when it is invested at rate r for t years.

Filling in the given values, we can solve for r:

  200 = 2000r(5)

  200/10000 = r = 2/100 = 2%

The interest rate is 2%.