if a loan is given for 2,500 for 1 year and the interest charged is 275 dollars what is the interest rate on the loan? how do I go about solving this do I subtract the 275 from 2500.
Interest=Principal*Rate*Time
275=2500(rate)(1)
rate=275/2500
=.11
so the "simple" interest rate is 11%
To find the interest rate on a loan, you need to use the formula for simple interest:
Interest = Principal * Rate * Time
In this case, you are given the following information:
Principal (loan amount) = $2,500
Interest charged = $275
Time = 1 year
Now, let's plug in the values into the formula:
$275 = $2,500 * Rate * 1
To isolate the rate, you should divide both sides of the equation by $2,500:
Rate = $275 / $2,500
By performing the division, you will find that the rate is 0.11 or 11%. So, the interest rate on the loan is 11%.