Equation: r = (1/t)(A/P - 1) Calculation: Solving our equation: r = (1/4)((12875/12000) - 1) = 0.01822917 r = 0.01822917
Converting r decimal to R a percentage R = 0.01822917 * 100 = 1.8229%/year
The interest rate required to get a total amount, principal plus interest, of $12,875.00 from simple interest on a principal of $12,000.00 over 4 years is 1.8229% per year.
