We have to calculate the simple interest rate on a $2150 investment paying $704.34 in interest in 7.8 years.
We can express the simple interest as:
[tex]I=nCr[/tex]where I is the total interest paid, n is the number of periods, C is the principal and r is the nominal annual rate.
We then can calculate the rate as:
[tex]\begin{gathered} I=nCr \\ r=\frac{I}{nC} \\ r=\frac{704.34}{7.8\cdot2150} \\ r=\frac{704.34}{16770} \\ r=0.042 \\ r=4.2\% \end{gathered}[/tex]Answer: the simple interest rate is 4.2%
