Question

Andy borrows $3890 over 4 years. What was the rate per annum of the loan if he paid back $5908?

Answer 1

The formula to get the rate R would be:

principal x (1+R)^time = (principle + interest)

=> 3890 x (1 + R)^4 = 5908

=> (1 + R)^4 = 5908/3890

=> (1 + R)^4 = 1.5188

=> 1 + R = 1.11

=> R = 1.11 - 1 = 0.11 = 11%

Hope this helps!

:)