Answer:
The appropriate interest rate would be 10%.
Step-by-step explanation:
Without further info I must assume that you want "simple interest" on the $25000 principal. The appropriate formula for simple interest is:
i = p*r*t, where p is the principal amount, r is the interest rate as a decimal fraction, and t is the time in years.
i
We want the rate, r, so we solve this equation for r: r = -------------
p*t
Now we're in a position to substitute the known values of i, p and t and to calculate r from them:
$5000 1
r = ---------- ------------- = --------------- = 0.10
($25000)(2 yrs) 10
The appropriate interest rate would be 10%.
