What annual interest rate was charged on a 2-year loan of $6300 if the simple interest paid was $1039.50? Show your work
Fay, Bob, Help, Tammy -- please use the same name for your posts.
I'll be glad to check your answer.
To find the annual interest rate charged on a loan, we can use the formula for simple interest:
Simple Interest = Principal × Rate × Time
In this case, the principal is $6300, the simple interest is $1039.50, and the time is 2 years.
Substituting these values into the formula, we get:
$1039.50 = $6300 × Rate × 2
Now let's solve for the rate:
Dividing both sides of the equation by ($6300 × 2), we have:
Rate = $1039.50 / ($6300 × 2)
Rate = $1039.50 / $12600
Rate ≈ 0.082143
To convert this decimal to a percentage, we can multiply by 100:
Rate ≈ 0.082143 × 100
Rate ≈ 8.2143%
Therefore, the annual interest rate charged on the 2-year loan of $6300 is approximately 8.2143%.