Question

Your brother lends you $125 at an annual interest rate of 25%. If you want to pay no more than $62.50 in simple interest, in how many years will you need to pay off the loan?

Answer 1

We know that the brother lends $125 at annual interest rate of 25% and you don't want to pay more than $62.50 in simple interest. To find out how many years you need to pay off the loan, we do:
Year 1: 125 * 25 = $31.25
Year 2: 125 * 25 * 2 = 31.25 * 2 = 62.50

You have to pay back the loan in 2 years.