Answered

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You borrow $620 from your brother and agree to pay back $700 in 5 months. What simple interest rate will you pay?

Sagot :

EXPLANATION

Since we have a borrow, we can apply the simple interest formula as shown as follows:

[tex]I=P\cdot r\cdot t[/tex]

Where P=Principal, r=rate, t=time (in this case in months) and I is the obtained interest.

Substituting terms:

[tex]700=620\cdot r\cdot0.416[/tex]

Isolating r:

[tex]\frac{700}{620\cdot0.416}=r[/tex]

Simplifying:

[tex]0.226=r[/tex]

We will pay a rate of 22.6%

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