The ABC Building society opened an account with a balance of R215 at the beginning of the year and closed it at the end of the second year with a balance of R320. Calculate the simple interest rate
To calculate the simple interest rate, we can use the formula:
Simple Interest = Principal x Rate x Time
Given that the principal (initial balance) is R215, the closing balance is R320, and the time period is 2 years, we can plug the values into the formula to solve for the rate:
R320 = R215 + R215 x Rate x 2
R320 = R215(1 + 2Rate)
R320 = R215 + R430Rate
R320 - R215 = R430Rate
R105 = R430Rate
Rate = R105 / R430
Rate = 0.244
Therefore, the simple interest rate is 24.4%.