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The simple interest rate of a number is represented by the following formula:

i = (T / P) - 1

Where:

i = interest rate

T = total of all payments

P = principal amount

For example, what is the interest rate if I borrowed $500 and paid back $50 per month for a year?

T = $50/month * 12 months = $600

P = $500

i = (600 / 500) -1

i = 1.2 - 1 = 0.2 = 20%

The simple interest rate is 20%.

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14y ago

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