Suppose that you borrow $3000.00 from a friend and promise to pay back $4230.00 in 2 years. What simple interest rate will you pay

Answer 1

To find the simple interest rate, we can use the formula:

Simple Interest = Principal * Interest Rate * Time

In this scenario, the principal (borrowed amount) is $3000.00, the interest rate is unknown, and the time is 2 years. The total amount to be paid back is $4230.00.

Let's substitute the values into the formula and solve for the interest rate:

$4230.00 = $3000.00 * Interest Rate * 2

Now, divide both sides of the equation by ($3000.00 * 2) to isolate the interest rate:

Interest Rate = $4230.00 / ($3000.00 * 2)

Interest Rate = $4230.00 / $6000.00

Interest Rate ≈ 0.705

Finally, multiply the result (0.705) by 100 to express it as a percentage:

Interest Rate ≈ 0.705 * 100

The simple interest rate you will pay is approximately 70.5%.