Answer:
The agreement is offering an implied interest rate of 10.16%.
Explanation:
Matthew borrowed $2,587.09 from his friend, but he will return $2,850, as 950 x 3 = 2,850.
Therefore, there is an excedent of $262.91, which constitutes an implied interest on the payment of the loan.
As 2,587.09 is the 100% of the loan, we have to know the percent that 262.91 represents in order to know the interest rate. We can know it by using a crossed multiplication:
2,587.09 = 100
262.91 = X
(262.91 x 100) / 2,587.09 = X
26,291 / 2,587.09 = X
10.16 = X
Therefore, the implied interest rate in this loan is of 10.16%.
