Jenna borrowed Php 5,000 for 3 years and had to pay Php 1,350 simple interest at the end of that time. What rate of interest did she pay?
Question
Jenna borrowed Php 5,000 for 3 years and had to pay Php 1,350 simple interest at the end of that time. What rate of interest did she pay?
Solution
To find the rate of interest, we can use the formula for simple interest which is I = PRT, where:
I = Interest P = Principal amount (the initial amount of money) R = Rate of interest T = Time the money is borrowed for
In this case, we know that:
I = Php 1,350 P = Php 5,000 T = 3 years
We want to find R. So, we rearrange the formula to solve for R:
R = I / (PT)
Substituting the given values:
R = 1350 / (5000 * 3)
R = 0.09
So, the rate of interest Jenna paid is 0.09 or 9%.
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