Simple Interest
The interest generated by an initial amount (principal) P in a time t at a rate t is:
I = P.r.t
Elisa pays $279 to get her bicycle back after 6 days. The loan was agreed for $270, thus the interest paid was I = $279 - $270 = $9
The time is t = 6 days. We must express it in years, thus:
t = 6/360
We'll leave it as it is for later calculations.
Solving for r:
[tex]\begin{gathered} r=\frac{I}{P\cdot t} \\ \text{Substituting:} \\ r=\frac{9}{270\cdot(\frac{6}{360})} \\ r=\frac{9\cdot360}{270\cdot6} \\ r=2 \end{gathered}[/tex]The annual simple interest was r = 2*100 = 200%
