Problema Solution
If the interest, for four years, on a loan of $1200 is $297.60, what is the interest rate?
Answer provided by our tutors
let
t = 4 years
P = $1200 the principal
I = $297.60
r = the annual interest rate
we will assume that the interest is simple, in that case we have:
I = P*r*t
r = I/(P*t)
r = 297.60/(1200*4)
r = 0.062 or 6.2% (0.062*100)
the interest rate is 6.2%.