Question

April took out a $600 loan from the bank. At the end of 5 years, she pays back the principal, plus $60 simple interest.

What was the interest rate?

Answer 1

2%

Explanation:

Answer 2

April took out a loan of $600 and paid it back with simple interest of $60 after 5 years. The formula to calculate interest is given the principal and the time and the interest rate is . For this problem we have to find the interest rate given . To archive that , we can just solve the equation making the interest rate the subject of the formula as shown below,

The interest rate is or 0.02 as a decimal. The interest rate is 2% as a percentage.

Explanation: