Question

Tim Jenkins borrowed $820.21. He paid $19.48 in interest on this 90 day loan. Using exact simple interest at what rate did he borrow?

Answer 1

8.9%

To find the rate at which Tim borrowed, we can use the formula for simple interest:

Interest = Principal * Rate * Time

Given that Tim borrowed $820.21 and paid $19.48 in interest over a 90-day loan, we can plug these values into the formula:

19.48 = 820.21 * Rate * (90/365)

To find the rate, we need to solve for Rate. First, let's simplify the equation:

Rate * (90/365) = 19.48 / 820.21

Now, divide both sides by (90/365):

Rate = (19.48 / 820.21) * (365/90)

Calculating this expression gives us the value for Rate. Rounding to the nearest thousandth, we get:

Rate = 0.089

So, Tim Jenkins borrowed at an interest rate of approximately 8.9%.