If a business borrows $20,000 and repays $30,800 in 4 years, what is the simple interest rate?
I = PRT
10,800 = 20,000 * R * 4
10,800 = 80,000 * R
0.135 = R
13.5% = R
if a bussiness borrows $20,000 and repays $29,500 in 5 years , what is the simple interest rate?
To find the simple interest rate, you need to use the formula:
Simple Interest = Principal (P) x Interest Rate (R) x Time (T)
In this case, the principal (P) is $20,000, and the interest accrued over 4 years is $30,800 - $20,000 = $10,800.
Plugging in these values into the formula, we get:
$10,800 = $20,000 x R x 4
To solve for the interest rate (R), we need to isolate R.
Divide both sides of the equation by ($20,000 x 4):
$10,800 / ($20,000 x 4) = R
Simplifying the right side:
$10,800 / $80,000 = R
To obtain the decimal form of the interest rate, calculate the division:
0.135 = R
To convert the decimal to a percentage, multiply by 100:
0.135 x 100 = 13.5
Therefore, the simple interest rate for this loan is 13.5%.