Question

Your friend tells you that if you let her keep 2020 of your Pokemon cards for three months, she will give you 22 cards extra when she returns your cards to you. What is the annual rate of interest she is willing to pay for the borrowed cards?

Answer 1

Answer: 40 %

Explanation:

Let the amount of one card = x

Hence, the value of 20 cards ( Principal amount ) = 20x

And, the value of 22 cards ( Total amount after 3 month ) = 22x

⇒ Total interest in 3 month = 22x - 20x =2x

Let the annual interest rate = r %

`(20x* r* 3/12)/(100)=2 x` ( By the formula of simple interest rate )

`\implies (10* r* 1/4)/(100)=1`

`\implies (10r)/(400)=1`

`\implies 10r=400`

`\implies r=40\%`

Hence, the annual rate of interest = 40%