Question

April took out a $600 loan from the bank. At the end of 1 years, she pays back the principal, plus $12 simple interest. What was the interest rate?

Answer 1

The interest rate r = 0.02 or 2%

Explanation:

Given

P = $600

I = $12

t = 1 year

To determine

Interest rate = r

Using the formula

I=Prt

r = I / Pt

substituting I = 12, P = 600, t = 1

r = (12) / (600 × 1)

r = 12/600

r = 0.02

Thus, the interest rate r = 0.02 or 2%