 If P45,000 accumulates to P105,000 invested in 12 years, what is the interest rate?

To find the interest rate for the given problem, we can use the formula for compound interest if compounding is involved, or the formula for simple interest if not. Since the problem doesn't specify compounding, we'll assume simple interest. The formula for simple interest is:

\[
A = P(1 + rt)
\]

Where:
- \( A \) is the accumulated amount (P105,000),
- \( P \) is the principal amount (P45,000),
- \( r \) is the interest rate per period,
- \( t \) is the time the money is invested (12 years).

Rearranging the formula to solve for \( r \):

\[
r = \frac{A - P}{Pt}
\]

Substituting the given values:

\[
r = \frac{105,000 - 45,000}{45,000 \times 12}
\]

Let's calculate the interest rate \( r \).The interest rate is approximately \(11.11\%\) per year.

Would you like more details or have any other questions? Here are 5 related questions:

1. What would be the interest rate if the investment period was 10 years instead of 12 years?
2. How would the interest rate change if the principal amount was P60,000 instead of P45,000?
3. What would be the accumulated amount after 15 years with the same interest rate?
4. How do you calculate the interest rate if the interest is compounded annually?
5. What is the total interest earned over the 12 years?

**Tip:** When dealing with financial problems, always clarify whether interest is simple or compounded, as this affects the calculations significantly.

Learn how to calculate the interest rate using the simple interest formula. Given an initial investment of P45,000 accumulating to P105,000 over 12 years, discover how to determine the interest rate per year. Suitable for students and learners interested in financial mathematics and calculations.

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