If a business borrows $18,000 and repays $20,700 in 3 years, what is the simple interest rate?
20700 - 18000 = 18000 * 3r
To calculate the simple interest rate, we need to use the formula:
Interest = Principal × Rate × Time
Given values:
Principal = $18,000
Interest = $20,700 - $18,000 = $2,700
Time = 3 years
Substituting the values into the formula, we can solve for the rate:
$2,700 = $18,000 × Rate × 3
Divide both sides of the equation by $54,000 to isolate the rate:
Rate = $2,700 / $54,000
Simplifying, we find:
Rate = 0.05, or 5%
Therefore, the simple interest rate for the loan is 5%.
To find the simple interest rate, we can use the formula:
Simple Interest = (Principal Amount) x (Interest Rate) x (Time)
In this case, the Principal Amount is $18,000, the Simple Interest is $20,700 - $18,000 = $2,700, and the Time is 3 years.
Rearranging the formula, we can solve for the Interest Rate:
Interest Rate = (Simple Interest) / (Principal Amount x Time)
Plugging in the values, we get:
Interest Rate = $2,700 / ($18,000 x 3)
Now let's calculate it.