Question

Rita borrowed $4000 from a bank for 3 years and was charged simple interest. The total interest that she paid on the loan was $840. As a percentage, what was the annual interest rate of her loan?

Answer 1

7%

Explanation:

Interest = Principle × Rate as a decimal × Time in years

840 = 4000 × r × 3

840 = 12,000r

r = 840/1200 = 0.07