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Eddy borrowed $50 000 from a bank at a simple interest rate of x% p.a. for rennovation of his house. He had to return $54 000 after 6 months. Find the value of x.

Question

Eddy borrowed 50000fromabankatasimpleinterestrateofx50 000 from a bank at a simple interest rate of x% p.a. for rennovation of his house. He had to return 54 000 after 6 months. Find the value of x.

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Solution

Step 1: Understand the problem Eddy borrowed 50,000andreturned50,000 and returned 54,000 after 6 months. The difference, $4,000, is the interest he paid. We need to find the annual interest rate (x%).

Step 2: Use the formula for simple interest The formula for simple interest is I = PRT, where I is the interest, P is the principal amount (the initial amount of money), R is the rate of interest per year, and T is the time in years.

Step 3: Substitute the given values into the formula In this case, I = 4,000,P=4,000, P = 50,000, and T = 0.5 years (6 months). We need to find R (which is the same as x%).

So, we have 4000 = 50000 * R * 0.5.

Step 4: Solve for R First, divide both sides of the equation by 50000 * 0.5 to isolate R.

R = 4000 / (50000 * 0.5) = 0.16.

Step 5: Convert R to a percentage To convert R to a percentage, multiply by 100.

x = R * 100 = 0.16 * 100 = 16%.

So, the annual interest rate is 16%.

This problem has been solved

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