Question

Joanna Brandon paid $487.50 in interest on 36 month (3 year) promissory note for $2500. What was the rate of interest that Joanna paid? Round to one decimal place.

Answer 1

The annual interest rate that Joanna paid was 6.5%.

Explanation:

Given that Joanna Brandon paid $ 487.50 in interest on a 36 month (3 year) promissory note for $ 2500, to determine what was the rate of interest that Joanna paid, the following calculation must be performed:

487.5 / 3 = 162.5

2500 = 100

162.5 = X

162.5 x 100/2500 = X

16,250 / 2,500 = X

6.5 = X

Thus, the annual interest rate that Joanna paid was 6.5%.