Question

Sebastian's parents agree to lend him two hundred dollars for some gaming equipment, as long as he pays them back two hundred fifty dollars in a year's time. What is the rate of simple annual interest in this arrangement?

five percent

twenty percent

twenty−five percent

fifty percent

Answer 1

25%
250=200(1+r)
250/200= 1+r
5/4 - 1= r
r= 0.25= 25%