Anna borrowed #120,000 for 2yrs to finance her building project if the interest charged was #10,000(a)find the amount that she paid back (b)find the interest rate that was charged
(a) principal + interest
(b) 120000((1+r)^2 - 1) = 10000
r = 0.04 = 4%
To find the answers, we'll use the following formula:
Total amount paid back = Principal + Interest
Interest Rate = (Interest / Principal) * 100
Given:
Principal (amount borrowed) = #120,000
Interest = #10,000
Time = 2 years
(a) To find the amount Anna paid back, we'll use the formula: Total amount paid back = Principal + Interest.
Total amount paid back = #120,000 + #10,000
Total amount paid back = #130,000
(b) To find the interest rate, we'll use the formula: Interest Rate = (Interest / Principal) * 100.
Interest Rate = (#10,000 / #120,000) * 100
Interest Rate = 0.0833 * 100
Interest Rate = 8.33%
So, Anna paid back #130,000, and the interest rate charged was 8.33%.
To find the amount Anna paid back, you can add the principal amount borrowed to the interest charged.
(a) Amount Anna paid back = Principal amount borrowed + Interest charged
= #120,000 + #10,000
= #130,000
Therefore, Anna paid back #130,000.
To find the interest rate that was charged, you need to use the formula for calculating simple interest:
Interest = (Principal) * (Rate) * (Time)
Where,
Principal = #120,000
Interest = #10,000
Time = 2 years
To find the interest rate (Rate), rearrange the formula:
Rate = Interest / (Principal * Time)
= #10,000 / (#120,000 * 2)
Calculating further,
Rate = #10,000 / #240,000
= 0.0417 or 4.17%
Therefore, the interest rate that was charged is 4.17%.