To calculate the rate of interest, we use the equation:
[tex]Interest\:paid=Amount\:borrowed\times Rate\:of\:interest\times Time[/tex]Where we have
Interest paid = $53.97
Amount borrowed = $700
Time = 8 months = 8/12 (conversion factor: 1 year = 12 months)
Putting those values in the equation, we get:
[tex]\begin{gathered} 53.97=700\times Rate\:of\:interest\times\frac{8}{12} \\ Rate\:of\:interest=0.11565=11.565\%\approx11.6\% \end{gathered}[/tex]The rate of interest is 11.6%.
