A car dealer will sell you a used car for $5,430 with $430 down and payments of $183.06 per month for 36 months. What is the simple interest rate? (Round each answer to the nearest tenth.)
PLEASE HELP!
$5,430 - 430 = 5,000
183.06 * 36 = 6590.16
6590.16 - 5,000 = 1590.16
1590.16/3 = 530.0533
530.0533 / 5000 = 0.1060106 = 10.6% interest rate
Thanks for your help, I'm not sure how but I kept getting 1.06%
You need to multiply 0.106 by 100 to get the percent.
You can also just move the decimal point two places to the right.
To find the simple interest rate, we need to first calculate the total amount of money that will be paid back over the 36 month period. Then we'll subtract the original amount borrowed to find the interest paid. Finally, we'll divide the interest paid by the original amount borrowed to find the interest rate.
Step 1: Calculate the total amount paid back over 36 months.
The monthly payment is $183.06, and it will be paid for 36 months.
Total amount paid back = Monthly payment * Number of months
Total amount paid back = $183.06 * 36
Total amount paid back = $6,591.36
Step 2: Calculate the interest paid.
Interest paid = Total amount paid back - Original amount borrowed
Interest paid = $6,591.36 - $5,430
Interest paid = $1,161.36
Step 3: Calculate the interest rate.
Interest rate = (Interest paid / Original amount borrowed) * 100
Interest rate = ($1,161.36 / $5,430) * 100
Interest rate = 0.2140 * 100
Interest rate = 21.4%
Therefore, the simple interest rate is approximately 21.4%.