if you paid $120 to a loan company for the use of $2000 for 90 days, what annual rate of interest did they charge?
Mathematics · High School · Thu Feb 04 2021
Answered on
Given:
Principal amount ( P ) = $2000
Term ( t ) = 90/360
Interest ( I ) = $120
Find the annual interest
Formula for Simple Interest
I = Prt
r = I/Pr
Solution:
Substitute the given values of t, I and P to the formula for r in terms of I
r = I/Pr
r = $120/($2000)(90/360)
r = $120/($500)
r = 0.24
Since we are given a decimal answer, in order to convert it into percentage, we multiply the decimal by 100. Hence, in converting a percentage into decimal, we divide the percentage by 100.
r = (0.24)(100)
r = 24%
Final answer:
The annual interest rate is 24%