SOLUTION: If a business borrows $20,000 and repays $33,500 in 5 years, what is the simple interest rate? 1 %

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Question 605895: If a business borrows $20,000 and repays $33,500 in 5 years, what is the simple interest rate?
1 %
Answer by jim_thompson5910(35256) About Me  (Show Source):
You can put this solution on YOUR website!
The amount of interest alone is 33500 - 20000 = 13500

So I = 13500

The principle is $20,000, so P = 20000

The time of the loan is 5 years, so t = 5


Plug all this into I = Prt and solve for r

I = Prt

13500 = 20000*r*5

13500 = 20000*5*r

13500 = 100000r

13500/100000 = r

0.135 = r

r = 0.135

So the simple interest rate is 13.5%.