Question

Matt paid $450 in interest on a 15 month note for
$5600. Find the rate of interest paid.

Answer 1

The rate is 6.43%

Explanation:

Given

`I = 450` --Interest

`P = 5600` -- Principal

`T= 15\ months` --Time

Required

Determine the rate

Using simple interest formula:

`I = PRT`

Make R the subject

`R = (I)/(PT)`

Convert time to years

`T= 15\ months`

`T =(15)/(12)\ years`

`T =1.25\ years`

Substitute values for I, P and T

`R = (450)/(5600*1.25)`

`R = (450)/(7000)`

`R = 0.0643`

Convert to percentage

`R = 0.0643*100\%`

`R = 6.43\%`