Calculating Interest Rate on a $1,400 Deposit with $1,800 Return

Are you curious about how much interest you've earned on an investment? Let's break it down. Say you made a $1,400 deposit and after one year, you received $1,800 back. How can you calculate the interest rate earned on this investment?

First, let's understand the basics of interest rates. The interest rate is the percentage of the principal amount that is paid back to the investor over a certain period of time. In this case, the principal amount is $1,400 and the return is $1,800.

To calculate the interest rate, you can use the formula: Interest Rate = (Return - Principal) / Principal. Plugging in the numbers from our example, the calculation would be: Interest Rate = ($1,800 - $1,400) / $1,400.

Solving this equation, we find that the interest rate earned on this investment is 28.57%. This means that you earned a 28.57% return on your $1,400 deposit over the course of one year.

Understanding how to calculate interest rates is crucial for investors looking to maximize their returns. By knowing the interest rate earned on an investment, you can make more informed decisions about where to put your money.