Question

To borrow​ money, you pawn your guitar. Based on the value of the​ guitar, the pawnbroker loans you ​$600. One month​ later, you get the guitar back by paying the pawnbroker ​$1470. What annual interest rate did you​ pay?

Answer 1

Answer:

1740%.

Step-by-step explanation:

We have been given that the pawnbroker loans you ​$600. One month​ later, you get the guitar back by paying the pawnbroker ​$1470.

We will use simple interest formula to solve our given problem.

$A=P(1+rt)$, where,

A = Final amount after t years,

P = Principal amount,

r = Annual interest rate in decimal form,

t = Time in years.

1 month = 1/12 year

$1470=600(1+r*\frac{1}{12})$

$1470=600+\frac{600}{12}*r$

$1470=600+50*r$

$1470-600=600-600+50*r$

$870=50*r$

$50r=870=$

$\frac{50r}{50}=\frac{870}{50}$

$r=17.4$

Since our interest rate is in decimal form, so we will convert it into percentage by multiplying by 100 as:

$17.4\times 100\%=1740\%$

Therefore, you paid an annual interest rate of 1740%.