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Find the annual simple interest rate of a loan, where $500 is borrowed and where $529.38 is repaid at the end of 15 months.

The annual simple interest rate of the loan is______%

User MRodrigues
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Final answer:

The annual simple interest rate of a loan where $500 is borrowed and $529.38 is repaid in 15 months is 4.7008%.

Step-by-step explanation:

To find the annual simple interest rate of a loan where $500 is borrowed and $529.38 is repaid at the end of 15 months, we use the simple interest formula Interest = Principal × rate × time. The interest paid is $529.38 - $500 = $29.38. The time should be converted into years because we are looking for the annual interest rate. Since 15 months is 15/12 years or 1.25 years, we use the formula as follows:

).38 = $500 × rate × 1.25

To find the rate, we divide both sides by ($500 × 1.25):

Rate = $29.38 / ($500 × 1.25)

Rate = $29.38 / $625

Rate = 0.047008, or 4.7008%

Therefore, the annual simple interest rate of the loan is 4.7008%.

User Narkeeso
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