Question

Pablo borrowed $50,000 to start a business. Three years later, he repaid the $50,000 along with an interest of $9,375. What was the annual interest rate?

Answer 1

Answer:

The annual interest rate is 6.25%

Step-by-step explanation:

We have been given that

P = $50,000

I = $9,375

t = 3 years

r = ?

The formula for simple interest is given by

$I=Prt\\\\\text{Substituting the known values, we get}\\\\9375=50000(r)\cdot3\\\\r=\frac{9375}{50000\cdot3}\\\\r=0.0625\\\\r=6.25\%$

Therefore, the annual interest rate is 6.25%