Elementary Algebra

Published by Cengage Learning
ISBN 10: 1285194055
ISBN 13: 978-1-28519-405-9

Chapter 4 - Proportions, Percents, and Solving Inequalities - 4.2 - Percents and Problem Solving - Problem Set 4.2 - Page 156: 65


The annual interest rate charged is 16.8%.

Work Step by Step

To find a formula for the annual interest rate, we start from the interest formula. The interest formula is: I = P $\times$ r $\times$ t. To find the annual interest rate, or r, we divide I by P $\times$ t So, r = $\frac{I}{P\ \times\ t}$ t = 1 month = $\frac{1}{12}$ (Because one month is $\frac{1}{12}$ of a year.) P = 2725 I = 38.15 Substitute these values in the formula to obtain: r = $\frac{38.15}{2725\ \times\ \frac{1}{12}}$ r = $\frac{38.15}{227.0833}$ r = 0.168 = 16.8% The annual interest rate charged is 16.8%.
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