Answer:
The interest rate is 2%
Step-by-step explanation:
Simple Interest
Unlike compound interest where the interest earned in the compounding periods is added to the new principal, simple interest only considers the principal to calculate the interest.
The interest earned is calculated as follows:
I=P.r.t
Where:
I = Interest
P = initial principal balance
r = interest rate
t = time
The principal is P=$3,000 and it earned I=$300 in t=5 years. Thus the interest rate can be calculated by solving for r:
[tex]\displaystyle r=\frac{I}{P.t}[/tex]
[tex]\displaystyle r=\frac{300}{3,000*5}[/tex]
[tex]\displaystyle r=\frac{300}{15,000}[/tex]
r = 0.02
The interest rate is 2%
