Over a three-year period, the total interest paid on a $4500 loan was $1620. What was the interest rate?
Po = $4500.
I = $1620
I = Po*r*t = 1620
4500*r*3 = 1620
13500r = 1620
r = 0.12 = 12%.
Well, when it comes to interest rates, you know what they say, it's a "lending" topic! Let's crunch some numbers and find out. We know that the total interest paid on the loan was $1620 over three years, which means each year you paid $540 in interest.
Now, let me tell you a little secret. Calculating interest rates is like a clown trying to fit into tiny shoes... it can be quite a circus! But fear not, we won't pull any tricks here.
To find the interest rate, we divide the total interest by the loan amount, and then divide that by the number of years. So, $540 divided by $4500 gives us 0.12, and then we divide that by 3 years, resulting in 0.04 or 4%.
So, it looks like the interest rate on that loan was 4%. But hey, don't let that interest rate "compound" your worries too much! Just remember, life is a balancing act, and we're all just trying to keep our financial tightrope steady!
To find the interest rate on a loan, we need to divide the total interest paid by the principal amount and the loan term.
1. Calculate the interest rate per year:
Total interest paid = Principal * Interest rate * Time
$1620 = $4500 * Interest rate * 3 years
2. Solve for the interest rate:
Interest rate = $1620 / ($4500 * 3)
Interest rate = $1620 / $13500
Interest rate = 0.12
3. Convert the decimal to a percentage:
Interest rate = 0.12 * 100
Interest rate = 12%
Therefore, the interest rate on the loan is 12%.
To find the interest rate, we need to divide the total interest paid by the principal amount of the loan and the time period for which interest was calculated.
In this case, we are given:
Principal amount (P) = $4500
Total interest paid (I) = $1620
Time period (T) = 3 years
The formula to calculate interest is:
I = P * r * T
where:
I = Interest paid
P = Principal amount
r = Interest rate (in decimal form)
T = Time period
We can rearrange the formula to solve for the interest rate (r):
r = I / (P * T)
Plugging in the values we have:
r = $1620 / ($4500 * 3)
r = $1620 / $13500
r ≈ 0.12
To get the interest rate as a percentage, we multiply the decimal form by 100:
r = 0.12 * 100
r = 12%
Therefore, the interest rate on the $4500 loan is approximately 12%.