Question

A loan of $4,000 was repaid at the end of 19 months with a check for $4,270. What annual simple interest rate was charged?

Answer 1

The rate of interest is 4.3%.

Explanation:

Given,

Principal (P) = $4000

Amount (A) = P+I = $4270

Time(T) = 19 months =
`(19)/(12)` years

Interest(I) = $4270-4000 = $270

To find the rate of interest.

Formula

I =
`(PTR)/(100)`

so,

R =
`(100XI)/(PT)`

R =
`(100X270X12)/(4000X19)`

= 4.26% = 4.3% (approx)