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You borrow $350 from your aunt and agree to repay her $400 ($350 principal + $50 interest) in 18 months. What interest rate (using simple interest, and to the nearest tenth) are you paying?

Respuesta :

Answer:

The interest rate is 0.79% per month.

Step-by-step explanation:

Present value of borrowed amount = $350

Future value of borrowed amount = $400

Interest amount = $50

Time duration = 18 months or 1.5 years

Now we have to find the rate of interest by using the above information. Here below is the calculation of interest rate.

Interest rate =  P×R×T

50 = 350 × R×18

R = 0.007936

Or, R = 0.79% per month.