Question

Moira borrowed $4,500 from her grandfather to pay for her first year of college. Three years later, she repaid the $4,500 a long with an interes of $143. What was the annual interes rate?

Answer 1

Answer: The annual interest rate is 1.06%

Step-by-step explanation: This is a simple interest computation.

The formular for a simple interest is given as;

I = (P ×R × T)/100

Where I represents the interest paid,

P represents Principal borrowed at the beginning

R represents the rate at which the interest is calculated

T represents the Time measured in number of years

If the interest is calculated as I = (P×R×T)/100, we should first of all make R the subject of the formular;

Multiply both sides by 100

100I = P×R×T

Divide both sides of the equation by P and T

(100I)/(P × T) = R

Now we can insert the values into the rearranged formular

(100 × 143)/(4500 × 3) = R

14,300/13,500 = R

143/135 = R

1.0592592593 = R

Therefore, R which is the rate of interest equals approximately 1.06%