SOLUTION: PLZZ HELP!! i did it but not sure if i am right? You sign a contract to borrow $20000 which states you must pay back $27,000 six years from now. What simple annual interest rate a

Question 585410: PLZZ HELP!! i did it but not sure if i am right?
You sign a contract to borrow $20000 which states you must pay back $27,000 six years from now. What simple annual interest rate are you paying?
my answer is 5.18%
Answer by jim_thompson5910(35256) (Show Source): You can put this solution on YOUR website!
The interest paid is $27000 - $20000 = $7000

Now plug this into the formula I = Prt along with P = 20000 and t = 6 and solve for r:

I = Prt

7000 = 20000r(6)

7000 = 120000r

7000/120000 = r

0.05833333333333 = r

r = 0.05833333333333

r = 0.05833

So the interest rate is roughly 5.8333% (which is 5 and 5/6%)
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