Paul promises to pay John $1,904 in a year if John gives him $1,498 today. What interest rate is Paul paying?

27.10%

Explanation:

Data provided in the question:

Principle amount = $1,498

Amount returned i. e the future value = $1,904

Time, n = 1 year

Now,

Interest paid = Amount returned - Principle amount

= $1,904 - $1,498

= $406

Using simple interest formula

Interest = Principle * Rate * Time

or

$406 = $1,498 * Rate * 1

or

Rate = 0.2710 or

= 0.2710 * 100%

= 27.10%