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Loren loaned his brother $3,000. In 4 years his brother paid back $3,000 plus $660 in interest. What was the interest rate?
A22.0%
B0.1%
C5.5%
D11.0%
Answer & Solution
Correct answer: C. 5.5%
1. Use the simple interest formula I equals P times r times t.
2. Substitute the known values: 660 equals 3,000 times r times 4, which simplifies to 660 equals 12,000 times r.
3. Divide both sides by 12,000 to get r equals 0.055.
4. Converting 0.055 to percent form gives a rate of interest of 5.5%.
_Source: OpenStax Elementary Algebra (CC BY 4.0), Ch 3 "Math Models", section 3.2 Solve Percent Applications_
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