Question
Asked Nov 14, 2019
3 views

To borrow​ money, you pawn your guitar. Based on the value of the​ guitar, the pawnbroker loans you  $840. One month​ later, you get the guitar back by paying the pawnbroker $1272.  What annual interest rate did you​ pay?

check_circle

Expert Answer

Step 1

Given:

To borrow​ money, you pawn your guitar. Based on the value of the​ guitar, the pawnbroker loans you $840. One month​ later, you get the guitar back by paying the pawnbroker $1272.

Step 2

Concept used:

Formula for the loan's future value
A P(1+rt)
Where
A Total amount
P Principal amount
rrate of interese
t time period in months or years
help_outline

Image Transcriptionclose

Formula for the loan's future value A P(1+rt) Where A Total amount P Principal amount rrate of interese t time period in months or years

fullscreen
Step 3

We know that 1 year = 12...

1 month
years
12
0.0833years
help_outline

Image Transcriptionclose

1 month years 12 0.0833years

fullscreen

Want to see the full answer?

See Solution

Check out a sample Q&A here.

Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in

Math

Algebra

Other