Question

charmaine borrowed $6000 from a bank for 2 years and was charged simple interest. the total interest that she paid on the loan was $840. as a pe what was the annual interest rate of her loan? if necessary, refer to the list of financial formulas.

Explanation:

Step1: Recall simple interest formula

The simple interest formula is $I = P \times r \times t$, where:

• $I$ = total interest,
• $P$ = principal amount,
• $r$ = annual interest rate (decimal),
• $t$ = time in years.

Step2: Plug in known values

Substitute $I = 840$, $P = 6000$, $t = 2$ into the formula:
$840 = 6000 \times r \times 2$

Step3: Simplify and solve for $r$

First calculate $6000 \times 2 = 12000$, so:
$840 = 12000r$
Solve for $r$: $r = \frac{840}{12000} = 0.07$

Step4: Convert to percentage

Multiply the decimal by 100 to get the percentage:
$0.07 \times 100 = 7$

Answer:

7%