Question

3 elliot borrows $900 at a yearly simple interest rate to buy an appliance. he takes 3 years to pay off the loan and interest. he pays $135 in interest. what is the interest rate?

Explanation:

Step1: Recall simple interest formula

$I = P \times r \times t$ where $I$=interest, $P$=principal, $r$=rate, $t$=time

Step2: Plug in known values

$135 = 900 \times r \times 3$

Step3: Simplify the right side

$135 = 2700r$

Step4: Solve for r

$r = \frac{135}{2700} = 0.05$

Step5: Convert to percentage

$0.05 \times 100\% = 5\%$

Answer:

5%