Question

If a business borrows $250,000 and repays $376,830 in six years, what is the simpleannual interest rate?

Answer 1

8.457%

Explanation:

We have that the simple interest formula is like this:

`A=P\cdot(1+rt)`

Where A is the final amount, r is the annual interest rate, P is the initial principal balance and t is time in years.

We replacing and calculate for r, just like this:

`\begin{gathered} 376830=250000\cdot(1+r\cdot6) \\ 1+6r=(376860)/(250000) \\ 6r=1.50744-1 \\ r=(0.50744)/(6) \\ r=0.08457 \\ r=8.457\text{\%} \end{gathered}`

Therefore, the simple annual interest rate is 8.457%