Multiple choice

Person X wanted to expand his business, so he decided to buy some more land, but fell short of money. So, he went to a moneylender. The moneylender lent him \$16,000 at a simple annual interest rate of r percent. After 2 years, person X made a single payment of \$18,240 to repay the loan, including the interest. What was the value of r?

  1. 5

  2. 6

  3. 7

  4. 8

  5. 10
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Interest = 18240 - 16000 = 2240. Simple interest formula: I = PRT/100. 2240 = 16000 * r * 2 / 100. 2240 = 320 * r. r = 2240 / 320 = 7%.

AI explanation

The total interest paid is the final amount minus the principal, giving 18240 minus 16000, which equals 2240. Using the Simple Interest formula, 2240 = (16000 * r * 2) / 100. Solving this gives 2240 = 320 * r, so the value of r is 7.

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