Compute the specified quantity.
A 3 year bond costs $20,000 and will pay a total of $3,600 in interest over its lifetime. What is its annual interest rate r (as a percent)? (Round your answer to three decimal places.)
r =
%

To find the annual interest rate $ r $, we use the following information:

- The bond has a duration of 3 years.
- The total interest paid over 3 years is \$3,600.
- The bond costs \$20,000.

The total interest formula for a bond is given by:

\[
\text{Total Interest} = P \times r \times t
\]

Where:
- $ P $ is the principal amount (\$20,000),
- $ r $ is the annual interest rate (which we need to find),
- $ t $ is the time in years (3 years).

We know the total interest over 3 years is \$3,600, so we can plug the known values into the equation:

\[
3600 = 20000 \times r \times 3
\]

Simplify the equation:

\[
3600 = 60000r
\]

Now, solve for $ r $:

\[
r = \frac{3600}{60000} = 0.06
\]

Thus, the annual interest rate $ r $ is:

\[
r = 0.06 \times 100 = 6\%
\]

Therefore, the annual interest rate is **6.000%**.

Would you like more details or have any questions?

Here are five related questions to explore:
1. How do you calculate interest for bonds with different durations?
2. How does compound interest differ from simple interest in bond calculations?
3. How does the bond market affect interest rates?
4. What is the formula for compound interest?
5. How does bond price relate to interest rate fluctuations?

**Tip:** Always verify if the interest given is simple or compound, as this impacts the overall calculations!

A 3 year bond costs $20,000 and will pay a total of $3,600 in interest over its lifetime. What is its annual interest rate r (as a percent)? (Round your answer to three decimal places.)

Learn how to calculate the annual interest rate for a 3-year bond costing $20,000 with a total interest of $3,600 over its lifetime. This problem involves simple interest calculations and is suitable for high school students in Grades 10-12.

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