Question

24. Anton borrowed $460 for a new bicycle. He made 9 monthly payments to repay the loan. He paid $60 interest. What is his simple interest rate?

7.67%
13.0%
9.75%
10.2%
17.4%​

Answer 1

17.4%​

Explanation:

This is a simple interest problem.

The simple interest formula is given by:

`E = P*I*t`

In which E is the interest amount, P is the principal(the initial amount of money), I is the interest rate(yearly, as a decimal) and t is the time, in year.

In this question:

He borrowed $460, so
`P = 460`

Paid $60 interest, so
`E = 60`

9 months. So
`t = (9)/(12) = 0.75`

We have to find I.

`E = P*I*t`

`60 = 460*I*0.75`

`I = (60)/(460*0.75)`

`I = 0.174`

So the correct answer is:

17.4%​