Elliot borrows $900 to buy an appliance at a yearly simple interest rate. He takes
3 years to pay off the loan and interest. He pays $135 in interest. What is the
interest rate?
To find the interest rate, we can use the following formula for simple interest:
Simple Interest = Principal x Rate x Time
Given:
Principal (P) = $900
Time (T) = 3 years
Simple Interest (I) = $135
Plugging in the values into the formula, we have:
$135 = $900 x Rate x 3
Solving for the rate:
Rate = $135 / ($900 x 3)
Rate = $135 / $2700
Rate = 0.05 or 5%
Therefore, the interest rate is 5%.