Question

If a business borrows $12,600 and repays $23,940 in 5 years, what is the simple interest rate? ​

Answer 1

18%

General Formulas and Concepts:

Pre-Algebra

Order of Operations: BPEMDAS

1. Brackets
2. Parenthesis
3. Exponents
4. Multiplication
5. Division
6. Addition
7. Subtraction

• Left to Right

Equality Properties

• Multiplication Property of Equality
• Division Property of Equality
• Addition Property of Equality
• Subtraction Property of Equality

Algebra I

Simple Interest Rate Formula: A = P(1 + rt)

• P is principle amount
• r is rate
• t is time

Explanation:

Step 1: Define

Identify variables

P = 12600

A = 23940

t = 5

Step 2: Solve for r

1. Substitute in variables [Simple Interest Rate Formula]: 23940 = 12600(1 + 5r)
2. [Division Property of Equality] Divide 12600 on both sides: 19/10 = 1 + 5r
3. [Subtraction Property of Equality] Subtract 1 on both sides: 9/10 = 5r
4. [Division Property of Equality] Divide 5 on both sides: 9/50 = r
5. Rewrite: r = 9/50
6. Evaluate: r = 0.18
7. Convert: r = 18%