Simple Interest Rate Find

 Simple  Interest Rate Find

 

Example:-

Carter Fenton wants to borrow 8000 from Christine O’Brien. He is willing to pay back 8380 in 6 months. What interest rate will he pay?

 

Solution:-

Use the formula for future value, with A = 8380,   P = 8000, t = \frac{6}{12} = .5, and solve for r.

A = P(1 + rt)

8380 = 8000(1 + .5r)

8380 = 8000 + 4000r (Distributive property)

380 = 4000r (Subtract 8000)

r = .095

Thus, the interest rate is 9.5%

 

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