To borrow money, you pawn your guitar. Based on the value of the guitar, the pawnbroker loans you $960. One month later, you get the guitar back by paying the pawnbroker $1170. What annual interest rate did you pay?
Mathematics · High School · Tue Nov 03 2020
Answered on
Given:
Loan worth: $960
Amount Paid: $1170
Determine the annual interest rate that was paid.
Solution:
In order to determine the annual interest rate that was paid, simply subtract the loan worth to the amount paid first.
= 1170 - 960
= 210
Now we divide 210 by the loan worth.
= 210/ 960
=0.21875
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.
=(0.21875)(100)
= 21.875%
Final answer:
The annual interest rate is 21.875%