Question

Tyler borrowed $600. After one year, he paid the whole loan back, with a total maturity value of $640. What was the interest rate of the loan?

Answer 1

Step 1:

In this question, we are given the following:

Tyler borrowed $600. After one year, he paid the whole loan back, with a total maturity value of $640. What was the interest rate of the loan?

Step 2:

The details of the solution are as follows:

`\begin{gathered} Principal\text{ = \$ 600} \\ Amount\text{ = \$ 640} \\ Interest\text{ = Amount - Principal = \$ 640 - \$ 600 = \$ 40} \end{gathered}`
`Using\text{ Simple Interest = }\frac{Principal\text{ x Rate x Time}}{100}`
`Then,\text{ we have that the Rate = }\frac{100\text{ x Simple Interest }}{Principal\text{ x Time}}`
`\begin{gathered} where\text{ Simple Interest = \$ 40 ,} \\ Time\text{ = 1 year} \\ Principal\text{ = \$ 600} \end{gathered}`
`Rate\text{ =}\frac{100\text{ x 40}}{600\text{ x 1}}=(4000)/(600)=\text{ 6}(2)/(3)\text{ \%}`

CONCLUSION:

The interest rate on the loan =

`6\text{ }(2)/(3)\text{ \%}`