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Moira borrowed $4,500 from her grandfather to pay for her first year of college. Three years later, she repaid the $4,500 along with an interest of $243. What was the annual interest rate? Round your answer to one decimal place.

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Answer:

  1.8%

Step-by-step explanation:

The effective rate can be found using the simple interest formula.

  I = Prt . . . interest of principal P at annual rate r for t years

  r = I/(Pt) . . . . solve for r

Using the given numbers, we have ...

  r = 243/(4500·3) = 0.018 = 1.8%

The annual interest rate was 1.8%.

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