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If a business borrows $100,000 and repays $129,750 in four years, what is thesimpleannual interest rate?

1 Answer

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The formula for determining simple interest is expressed as

I = PRT/100

where

P = principal or initial amount borrowed

R = interest rate

T = time in years

I = interest

If $100000 was borrowed and $129750 was repaid, it means that the interest is

I = 129750 - 100000 = 29750

T = 4 years

P = 100000

Thus, we have

29750 = (100000 * R * 4)/100

29750 = 4000R

R = 29750/4000

R = 7.44

The interest rate is 7.44%

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