Answer:
1.05%.
Step-by-step explanation:
If an amount of money, P, called the principal, is borrowed for a period of t years at an annual interest rate r, the amount of interest, I, is given by
I=PrtwhereIPrt=interest=principal=rate=time
The following information is given.
IPt=$1,260=$30,000=4 years
Substituting the given information into the simple interest formula and solving for r gives
I1,2601,260=Prt=(30,000)(r)(4)=120,000r
Dividing both sides by 120,000 and then converting to a percent, we have
r=1,260120,000=0.0105=1.05%
Thus, David's annual interest rate was 1.05%.
