Question

Three years ago, Ava lent her sister $400 to buy some clothes. Today Ava’s sister paid her loan in full with $454. What simple annual interest rate did she pay?

Answer 1

the answer would be 4.5%

Explanation:

Answer 2

Ava's sister paid a 4.5% annual interest rate

Her sister paid $54 more than she borrowed, divide that by 3 (years till she paid)

54/3 = 18

That's $18 for every year she'd had the $400 loan out, divide it by 4 to get the percentage

18/4 = 4.5/100 = 4.5%