The principal P is borrowed and the loans future value A at time t is given. Determine the loans simple interest rate r.
P= $3000.00 A= 3180.00 t= 2years
We can use the formula for the future value of a loan to determine the interest rate:
A = P(1 + rt)
Substituting the given values:
3180 = 3000(1 + r * 2)
Divide both sides by 3000:
1.06 = 1 + 2r
Subtract 1 from both sides:
0.06 = 2r
Divide both sides by 2:
0.03 = r
Therefore, the simple interest rate is 3%.