A man needed money to buy lawn equipment. He borrowed $700 for 5 months and paid $53.94 in interest.

Question

A man needed money to buy lawn equipment. He borrowed $700 for 5 months and paid $53.94 in interest. What was the rate of interest?
(round to one decimal place as needed)

Answer 1

Assuming it's simple interest:

 

Interest = Principle*Rate*Time

 

Priniciple = $700

Time = 5 months = 5/12 year

Interest = $53.94

 

53.94 = 700*rate*(5/12)

 

(53.94)(12)/(700)(5) = rate

 

0.185 = rate = 18.5% per annum