Question - Calculating Pawnbroker's Interest Rate
Solution:
The image shows a word problem which reads:Joaquin pawns his favorite watch for a loan of $120. After 30 days, he buys his watch back for $140. What interest did the pawnbroker charge Joaquin?To solve this you would:1. Calculate the total amount of interest charged by subtracting the initial loan amount from the amount paid to reclaim the watch: $140 - $120 = $20.2. To find the percentage interest rate, you compare the interest charged to the initial loan amount using the formula:Interest Rate = (Interest Charged / Initial Loan Amount) × 1003. Substitute the numbers in:Interest Rate = ($20 / $120) × 100 = 1/6 × 1004. Calculate the final percentage:Interest Rate = 16.666... %Rounded to the nearest whole number, the pawnbroker charged Joaquin 17% interest.
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