Chell lends $500 to a friend for 8 months. What simple interest rate should she charge if she wants to be paid back a total of $535?
Well, lending money to friends can sometimes turn into a comedy of errors. But let's crunch some numbers, shall we? To calculate the simple interest rate, we can use the formula:
Interest = Principal × Rate × Time
In this case, Chell lent $500 for 8 months, and she wants to be paid back $535. So, the interest would be $535 - $500 = $35.
Now, to calculate the rate, we rearrange the formula to solve for Rate:
Rate = Interest / (Principal × Time)
Rate = $35 / ($500 × 8/12)
Simplifying that, we get:
Rate = $35 / ($500 × 2/3)
And after playing around with fractions, the result is:
Rate = $35 / ($500 × 3/2)
Finally, we multiply and simplify:
Rate = $35 / $750
So, Chell should charge a simple interest rate of approximately 4.67%. Now, let's hope her friend pays back on time and doesn't turn this into a sitcom-worthy situation!
To find the simple interest rate, we can use the formula:
Interest = Principal * Rate * Time
Where,
Principal = $500 (the amount lent)
Interest = $535 - $500 = $35 (the amount to be paid back)
Time = 8 months
Let's substitute the values into the formula and solve for the rate:
35 = 500 * Rate * 8
Divide both sides of the equation by (500 * 8):
Rate = 35 / (500 * 8)
Rate = 35 / 4000
Rate = 0.00875 or 0.875%
Therefore, Chell should charge an interest rate of 0.875% to be paid back a total of $535.
To find the simple interest rate that Chell should charge, we can use the formula for simple interest:
Simple interest = (Principal * Rate * Time)
Given that Chell lends $500 and wants to be paid back a total of $535, we can calculate the interest earned:
Interest = Total amount to be paid back - Principal
Interest = $535 - $500
Interest = $35
We also know that the time period is 8 months. Substituting these values into the formula:
$35 = $500 * Rate * 8
Now, we can solve for the rate:
Rate = $35 / ($500 * 8)
Rate = $35 / $4000
Rate = 0.00875
To express this rate as a percentage, we multiply by 100:
Rate = 0.00875 * 100
Rate = 0.875%
Therefore, Chell should charge a simple interest rate of 0.875% for 8 months in order to be paid back a total of $535.