Question

Jane would like to borrow $850 for exactly one year, so that she can buy a brand-new lawn mower for the lawn-mowing business she is starting. jane's local bank agrees to lend her the money only if she is willing to pay back the full amount plus an extra $30, for a total repayment amount of $880. What is the annual interest rate on jane's loan from her bank?

Answer 1

3.53% your answer is

Answer 2

The answer is: 3.53%

Step-by-step explanation:

Jane is being charged simple interest. To calculate the interest rate we just use the following formula:

Interest rate = [(future value / present value) - 1 ] x 100% =

Interest rate = [($880 / $850) - 1] x 100% = (1.0353 - 1) x 100% = 0.0353 x 100%

Interest rate = 3.53%