Question

Savannah takes a car to a title loan business to borrow some money. Savannah is given $2,900.00. She must pay back the $2,900.00 in addition to a $1,375.00 fee in 8 months.

What simple interest rate is she
being charged?

Round to the nearest tenth of a percent and don't forget to include a percent sign, %, in your answer.

Savannah is being charged a simply interest rate of ______.

Answer 1

Explanation:

To find the simple interest rate that Savannah is being charged, we can use the formula for simple interest:

I = P * r * t

where I is the total interest paid, P is the principal (the amount borrowed), r is the interest rate, and t is the time period over which the interest is paid.

Since Savannah must pay back the $2,900.00 principal plus a $1,375.00 fee, the total interest paid is $1,375.00. The time period is 8 months, which is equal to 8/12 = 2/3 of a year. Substituting these values into the formula and solving for r, we get:

$1,375.00 = $2,900.00 * r * (2/3)

r = $1,375.00 / ($2,900.00 * (2/3)) = 0.1429

This is the interest rate that Savannah is being charged. To express this rate as a percentage, we can multiply it by 100% to get:

r = 0.1429 * 100% = 14.3%

Therefore, Savannah is being charged a simple interest rate of approximately 14.3%.