Question

Suppose a man takes out a $335 loan from a pawn shop, and the loan must be paid off with a single payment of $458 in 3 months. What simple interest rate r is being charged by the pawn shop?

Answer 1

simple interest rate r = 12.24%

Explanation:

Given that:

The Principal amount= 335

amount to be paid back = 458

number of months (time) = 3 months

Simple Interest = Amount to be paid back - Principal amount

Simple Interest = 458 - 335

Simple Interest = 123

Simple Interest S.I = Prt/100

123 =( (335 × r × 3)/100)

123 = (1005r)/100

12300 = 1005 r

r = 12300/1005

r =12.24%