Question

To borrow money, you pawn your guitar. Based on the value of the guitar, the pawnbroker loans you $960. One month later, you get the guitar back by paying the pawnbroker $1,472. What annual interest rate did you pay? Round to the nearest tenth of a percent. ...?

Answer 1

Here is the solution of the given problem above.
Given that the pawnbroker loans you $960, and a month later, you will be paying $1,472, we will find if how much is the annual interest rate.
Firstly, we need to deduct 960 from 1,472 and this gives us $512. $512 of 1,472 is 0.35%. We multiply 0.35% by 12 (annual 12 months) and the result is 4.17%. Therefore, the annual interest rate that you paid is 4.17%. Hope this answer helps.