Simple annual interest

Question

Paul borrowed 100 dollars from Greg seven months ago. Today , Paul paid Greg back 125.75. What is the simple annual interest rate that Paul paid .

Answer 1

Greetings! Lets solve this shall we!?

Using the Simple Interest Formula with Future Value A = P(1 + rt) where our values are

A = 125.75

P = 100

r = unknown

t = 7/12 months.

*Note: whenever you have the time in months, we always put it over 12.

So,

125.75 = 100(1 + (7/12)r)

125.75 = 100 + (58.333)r)

-100 -100

----------------------------------------

25.75 = (58.333) r

25.75/(58.333) = r

0.44142857 = r

r = 44% Interest

I hope this helps!