Question

After 8 months, $750 simple interest was owed ona loan of $9000. Find the annual interest rate.

Answer 1

You use the following formula:

I=(P)(R)(T)

Where I=Interest, P=Principal, R=Rate of Interest, T=Time

R=I/(P)(T)
R=750/(9000)(8/12)
R=(750)(12)/(9000)(8)
R=9000/72,000
R=0.125=12.5%

Therefore, the annual interest is 12.5%