Question

Me Johnson borrowed $8000 for 4years to make home improvements if he repaid a total of $10,320, at what interest rate did he borrow the money?

Answer 1

7.25%

Explanation:

Answer 2

The rate of interest is 7.25 % per year

Solution:

Given that Johnson borrowed $8000 for 4 years to make home improvements

He repaid a total of $ 10320

To find: Rate of interest

The simple interest is given as:

`S.I = ( p * n * r)/(100)`

Where "p" is the principal and "n" is the number of years and "r" is the rate of interest

We know that,

Total amount = principal + simple interest

10320 = 8000 + simple interest

Simple Interest = 10320 - 8000

Simple interest = 2320

Substitute S.I = 2320 and n = 4 in simple interest formula

`2320 = (8000 * 4 * r)/(100)\\\\2320 = 80 * 4 * r\\\\2320 = 320r\\\\r = (2320)/(320)\\\\r = 7.25`

Thus rate of interest is 7.25 % per year