Find the annual simple interest rate of a loan, where $100 is borrowed and where $105 is repaid at the end of 14 months.

Question

Find the annual simple interest rate of a loan, where $100 is borrowed and where $105 is repaid at the end of 14 months.

Annual simple interest rate = ______

Answer 1

Total return earned in 14 months is 105/100 - 1 = 1.05-1=0.05= 5%

Monthly simple interest rate will be r= 5%/14

the annual simple interest rate will be R = 12 * r = 12 * 5%/14 = 4.29%