Answer:
The rate of simple interest is 0.125, or 12.5%.
Explanation:
If the man must repay $750 after 4 years on a $500 loan, the simple interest would be ($750-$500), or $250.
The simple interest formula is i = p*r*t. Solving this for the interest rate, r, yields
i
r = ----------
p*t
and so, with i = $250, p = $500 and t = 4 yr, we find r as follows:
$250
r = ----------------- = 0.125
$500*4
The rate of simple interest is 0.125, or 12.5%.