Joseph’s lunch at the diner costs $15 without tax. He left the waiter a 21% tip. What was his total cost of the lunch, including
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The annual interest rate is 3.5%.
Solution:
Given Interest (I) = $26.25
Principal (P) = $500
Time (t) = 18 months
Rate of interest (r) = ?
Time must be in years to find the rate per annum.
1 year = 12 months
Divide the time by 12.
Time (t) = years
Now, find the rate of interest using simple interest formula.
<u>Simple interest formula:</u>
⇒ r = 3.5%
Hence the annual interest rate is 3.5%.