Zach borrowed $4,000 from his grandfather to buy a used car so he could travel to and from work. After working for 3 years, he has saved $5,440 to pay back to his grandfather. At what interest rate did Zach borrow the money?

A) 9%
B) 12%
C) 25%
D) 26%

Question

Zach borrowed $4,000 from his grandfather to buy a used car so he could travel to and from work. After working for 3 years, he has saved $5,440 to pay back to his grandfather. At what interest rate did Zach borrow the money?
 
A) 9%
B) 12%
C) 25%
D) 26%

johnweldon1993 · Answer

So again here we have

Interest earned...is current balance - original balance
5440 - 4000 = 1440....this is 'I'

't' is 3 years

and

P = 4000

so we want to solve for 'r'

I = prt

$$R = \frac{ I }{ pt }$$

plug in your numbers

$$R = \frac{ 1440 }{ 4000(3) }$$

what does 'r' equal? :P