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27 September, 05:57

To buy new equipment, a business owner borrowed $4,200.00 for 2 years and paid $850.00 simple interest on the loan. What rate of interest did she pay?

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  1. 27 September, 07:07
    0
    simple interest formula: I = PRT

    850=4200*2 * (R)

    850=8400*R

    850/8400=R

    Rate =.1011904761904762
  2. 27 September, 09:38
    0
    Answer: Approximately 10.12%

    Explanation: The formula for simple interest is = P*R*T/100. Where P is principal which is 4200 in the question, R is the interest rate that is unknown, T is time which is 2 years.

    Substituting the figures in the question and making R the subject of formula,

    850 = 4200 * R * 2/100

    850 = 8400R/100

    Applying the cross multiplication rule 850*100 = 8400R

    85000 = 8400R

    Divide both sides by 8400 to get the value of R

    85000/8400 = 8400R/8400

    R = 10.1190%
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