The principal P is borrowed and the loans future value A at time t is given. Determine the loans simple interest rate r.
P= $5000.00 A= $5400.00 t= 1year
We can use the simple interest formula:
A = P + Prt
Where:
A = future value of the loan
P = principal borrowed
r = interest rate
t = time in years
Plugging in the given values:
5400 = 5000 + 5000 * r * 1
Simplifying the equation:
5400 - 5000 = 5000r
400 = 5000r
Dividing both sides by 5000:
r = 400/5000
r ≈ 0.08 or 8%
Therefore, the loan's simple interest rate is 8%.