Question

In the following exercises, solve.

Pablo borrowed $\backslash (50,000$to start a business. Three years later, he repaid the $\backslash )50,000$, plus $\$9,375$ interest. What was the rate of interest?

Short answer

The rate of interest for the amount of $\$50,000$is $6.25\%$

Step-by-step solution

Step 1. Given Information

The principal,$P=\$50,000$

Interest,$I=9,375$

Time,$t=3$ years

Step 2. Simple interest formula

Simple interest,$I=Prt$

Substitute the known values,

$$\begin{gathered} 9375=50,000\left(r\right)\left(3\right) \\ 9375=1,50,000r \end{gathered}$$

Step 3. Find r 

Solve the equation for r,

$$\begin{gathered} r=\frac{9,375}{1,50,000} \\ =0.0625 \end{gathered}$$

Write the rate of interest in percentage,

$$\begin{gathered} r=0.0625\times 100 \\ =6.25\% \end{gathered}$$