The interest rate on a car loan has increased 50% over the last 10 years and is now 9%. What was the rate 10 years ago?
To determine the interest rate 10 years ago, we need to find the original rate before it increased by 50%. Here's how you can calculate it:
1. Let's assume that the original interest rate 10 years ago is represented by 'x'.
2. The interest rate has increased by 50%, which means it has become 150% of its original value.
3. We can express this relationship with the equation: x + 0.5x = 1.5x.
Here, 0.5x represents the 50% increase in the interest rate.
4. According to the problem, the current interest rate is 9%, which is equal to 0.09 when expressed as a decimal.
5. We can now create the equation: 1.5x = 0.09.
6. To solve for 'x', divide both sides of the equation by 1.5: x = 0.09 / 1.5.
7. Simplifying the expression gives us: x = 0.06.
Therefore, the interest rate on the car loan 10 years ago was 6%.