Question

Pablo borrowed $50,000 to start a business. Three years later, he repaid the $50,000 along with an interest of $9,375. What was the annual interest rate? Round your answer to two decimal places.

Answer 1

Answer:

The annual interest rate is 5.89%.

Step-by-step explanation:

Principal =  $50,000

Interest = $9,375

Amount = Principal +interest

Amount = $50,000+$9,375

Amount = $59375

Time = 3 years

We are supposed to find the rate of interest

Formula : $A=P(1+r)^t$

$59375=50000(1+r)^3$

$\frac{59375}{50000}=(1+r)^3$

$1.1875=(1+r)^3$

$\sqrt[3]{1.1875}=(1+r)$

$1.0589=(1+r)$

$1.0589-1=r$

$0.0589=r$

$0.0589 \times 100=r$

$5.89\%=r$

Hence The annual interest rate is 5.89%.

Answer 2

Answer:

6.25%

Step-by-step explanation: