Compute the rate for the following loan. Round answers to the nearest tenth of a percent; use ordinary interest when time is stated in days.
Do not enter the percent symbol in your answer.
Principal Rate (%) Time Interest
$5,000 % 3 years $1,200
Compute the rate for the following loan. Round answers to the nearest tenth of a percent; use ordinary interest when time is stated in days.
Do not enter the percent symbol in your answer.
Principal Rate (%) Time Interest
$5,000 % 3 years $1,200
To compute the rate for the given loan, we need to use the formula for ordinary interest:
Interest = Principal * Rate * Time
Given:
Principal = $5,000
Time = 3 years
Interest = $1,200
Plugging in these values into the formula, we get:
$1,200 = $5,000 * Rate * 3
To isolate the rate, divide both sides of the equation by $5,000 * 3:
$1,200 / ($5,000 * 3) = Rate
Now, we can calculate the rate:
$1,200 / ($5,000 * 3) = 0.08
Therefore, the rate for the given loan is 0.08 or 8% (rounded to the nearest tenth of a percent).