Dominic pays 7%interest on his $22000 college loan and 13% interest on his $21000 car loan. What average interest rate does he pay on the total
$43000 he owes? Round your answer to the nearest tenth of a percent.
interest paid = .07(22000) + .13(21000)
avg rate of interest = (interest paid)/43000 * 100%
To find the average interest rate Dominic pays on the total $43,000 he owes, we can use a weighted average formula.
The weighted average formula is: Total interest paid / Total amount owed
Dominic pays 7% interest on his $22,000 college loan, so the interest paid on the college loan is 7% of $22,000, which is $1,540.
Dominic pays 13% interest on his $21,000 car loan, so the interest paid on the car loan is 13% of $21,000, which is $2,730.
Therefore, the total interest paid is $1,540 + $2,730 = $4,270.
The total amount owed is $43,000.
Now, we can calculate the average interest rate by dividing the total interest paid by the total amount owed:
Average interest rate = Total interest paid / Total amount owed
Average interest rate = $4,270 / $43,000
Let's calculate this:
Average interest rate = 0.0993 or 9.93% (rounded to the nearest tenth of a percent)
Therefore, Dominic pays an average interest rate of 9.93% on the total $43,000 he owes.