Answer to Question #242685 in Financial Math for khushi

Question

Jeremy was charged interest of $158 for a loan amount of $3,000 that she borrowed for 170 days. What annual rate of simple interest was charged?

Answer 1

The simple interest $I$ on $P$ dollars at a rate of interest $r$ per year for $t$ years is 

$$I=Prt$$

Solve for $r$

$$r=\dfrac{I}{Pt}$$

$$r=\dfrac{158}{3000(170/365)}=0.1131$$

Annual rate of simple interest is $11.31\%.$