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4 October, 07:27

On January 30, 2014, your parents lent you $400. On January 30, 2015, you repaid the loan by writing your parents a check for $432. What was the annual interest rate your parents charged you for that loan?

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  1. 4 October, 09:22
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    The annual interest rate charged would be 8%

    Explanation:

    The annual interest rate which is charged by the parents for the loan is computed as:

    Interest rate = (Amount repaid for loan - Lent amount by parents) / Lent amount by parents * 100

    where

    Lent amount by parents is $400

    Amount repaid for loan is $432

    Putting the values above:

    Interest rate = ($432 - $400) / $400 * 100

    Interest rate = $32 / $400 * 100

    Interest rate = 0.08 * 100

    Interest rate = 8%
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