Suppose that you borrow $3000.00 from a friend and promise to pay back $4290.00 in 2 years. What simple interest rate will you pay
To find the simple interest rate, we can use the formula:
Simple Interest = Principal x Rate x Time
Where:
Principal = $3000.00
Simple Interest = $4290.00 - $3000.00 = $1290.00
Time = 2 years
Now we can rearrange the formula to solve for the rate:
Rate = Simple Interest / (Principal x Time)
Rate = $1290.00 / ($3000.00 x 2)
Rate = $1290.00 / $6000.00
Rate ≈ 0.215
Therefore, the simple interest rate you will pay is approximately 0.215, or 21.5%.