Question

Walt Carter borrowed $2,500.00 to purchase a motorcycle. He agreed to pay back $2,800.50 in 270 days. What exact interest rate was he paying? (Round your answer to the nearest tenth of a percent.)

Answer 1

This is simple interest, so if A is the amount he'll pay back and P is the amount he borrowed at interest rate r for t years, then

\( A=P+Prt\) or simply, \( I=Prt\) where I is the amount of the interest. You can use either of those formulas, but just make sure that if you use the 2nd one, you have only the INTEREST on the left side.

Substitute in your values, and solve for r. Notice that your t is a portion of a year, so use t=270/365