Respuesta :
The rate of interest is 7.25 % per year
Solution:
Given that Johnson borrowed $8000 for 4 years to make home improvements
He repaid a total of $ 10320
To find: Rate of interest
The simple interest is given as:
[tex]S.I = \frac{ p \times n \times r}{100}[/tex]
Where "p" is the principal and "n" is the number of years and "r" is the rate of interest
We know that,
Total amount = principal + simple interest
10320 = 8000 + simple interest
Simple Interest = 10320 - 8000
Simple interest = 2320
Substitute S.I = 2320 and n = 4 in simple interest formula
[tex]2320 = \frac{8000 \times 4 \times r}{100}\\\\2320 = 80 \times 4 \times r\\\\2320 = 320r\\\\r = \frac{2320}{320}\\\\r = 7.25[/tex]
Thus rate of interest is 7.25 % per year
