Question

You borrow $620 from your brother and agree to pay back $700 in 5 months. What simple interest rate will you pay?

Answer 1

Step-by-step explanation

Since we have a borrow, we can apply the simple interest formula as shown as follows:

`I=P\cdot r\cdot t`

Where P=Principal, r=rate, t=time (in this case in months) and I is the obtained interest.

Substituting terms:

`700=620\cdot r\cdot0.416`

Isolating r:

`(700)/(620\cdot0.416)=r`

Simplifying:

`0.226=r`

We will pay a rate of 22.6%