Question

A man needed money to buy lawn equipment. He borrowed ​$700.00 for five months and paid ​$53.95 in interest. What was the rate of​ interest?

Answer 1

Answer: The rate of interest per year is 18.49 %.

Step-by-step explanation:

To calculate the rate of interest, we use the equation:

`\text{Interest paid}=\text{Amount borrowed}* \text{Rate of interest}* \text{Time}`

where,

Interest paid = $ 53.95

Amount borrowed = $ 700

Rate of interest = ?

Time = 5 months =
`(5)/(12)` (Conversion factor: 1 yr = 12 months)

Putting values in above equation, we get:

`\$53.95=\$700* \text{Rate of interest}* (5)/(12)\\\\\text{Rate of interest}=0.1849* 100=18.49\%`

Hence, the rate of interest per year is 18.49 %.