Answer: The interest rate on the loan is 14%
Explanation:
We would apply the formula for determining simple interest which is expressed as
I = PRT/100
Where
I represents interest paid on the loan.
P represents the principal or amount taken as loan
R represents interest rate
T represents the duration of the loan in years.
From the information given,
P = $3700
R = ?
T = 1 year
Interest = $518
Therefore,
518 = (3700 × R × 1)/100
Multiplying both sides of the equation by 100, it becomes
51800 = 3700R
R = 51800/3700
R = 14%