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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