Question

In the following exercises, solve.

Kenneth loaned his niece $\backslash (1200$to buy a computer. Two years later, she paid him back the $\backslash )1,200$, plus $\$96$ interest. What was the rate of interest?

Short answer

The rate of interest for the amount of $\$1,200$ is $4\%$

Step-by-step solution

Step 1. Given Information

The principal, $P=\$1,200$

Interest, $I=\$96$

Time, $t=2$ years

Step 2. Simple interest formula

Simple interest, $I=Prt$

Substitute the known values,

$$\begin{gathered} 96=1200\left(r\right)2 \\ 96=2400r \end{gathered}$$

Step 3. Find r

Solve the equation for r,

$$\begin{gathered} r=\frac{96}{2400} \\ =0.04 \end{gathered}$$

Write the rate of interest in percentage,

$$\begin{gathered} r=0.04\times 100 \\ =4\% \end{gathered}$$