Carol lent a friend \(\$200\) for one year. She refused to accept any interest. When the friend paid back the loan, she also gave Carol a \(\$32 \)silk scarf. What annual rate of interest would the friend have been paying if she had given Carol the \(\$32\) in cash?
Explanation
You can use the formula i = prt to get the formula \(r= \frac {i}{pt}\). Put 32 in place of i, 200 in place of p, and 1 in place of t.
\(r= \frac {32}{200 \times 1}\)
\(r= \frac {32}{200}=\frac {16}{100}=16\%\)
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