Question

In the following exercises, solve.

Lebron loaned his daughter $\backslash (20,000$to help her buy a condominium. When she sold the condominium four years later, she paid him the $\backslash )20,000$, plus $\$3000$ interest. What was the rate of interest?

Short answer

The rate of interest for the amount of $\$20,000$ is $3.75\%$

Step-by-step solution

Step 1. Given Information

The principal,$P=\$20,000$

Interest,$I=\$3000$

Time,$t=4$ years

Step 2. Simple interest formula

Simple interest, $I=Prt$

Substitute the known values,

$$\begin{gathered} 3,000=20,000\left(r\right)\left(4\right) \\ 3000=80,000r \end{gathered}$$

Step 3. Find r 

Solve the equation for r,

$$\begin{gathered} r=\frac{3000}{80,000} \\ =0.0375 \end{gathered}$$

Write the rate of interest in percentage,

$$\begin{gathered} r=0.0375\times 100 \\ =3.75\% \end{gathered}$$