Question

To buy new equipment, a business owner borrowed $4,200.00 for 2 years and paid $850.00 simple interest on the loan. What rate of interest did she pay?

Answer 1

Answer: 10.1%

Explanation:

The formula for simple interest is Interest = Principal x Rate x Time.

In order to solve for the interest you need to put the numbers into the formula:

$850 = $4,200 x r x 2

$850 = $8,400r

Divide both sides by $8,400

.101= r

10.1% = rate