Question

Enrique borrowed $23,000 to buy a new car . He pays his uncle 2% interest on the $4,500 he borrowed from him, and he pays the bank 11.5% interest on the rest. What average interest rate does he pay on the total $23,000?

Answer 1

Answer:

The average interest rate will be approximately 9.64%

Step-by-step explanation:

Enrique borrowed $23000

2% interest on $4500 will be

4500 × 2/100

= 45 × 2

= $90

On the rest, which is

$23000 - $4500 = $18500

11.5% interest on $18500 will be

18500 × 11.5/100

= 185 × 11.5

= $2127.50

The total interest will be

$90 + 2127.50 = $2217.50

The average interest will be Total interest multiply by 100, divide by principal

That is Interest = pr/100, where t = 1

r = (I × 100)/p

r = (2217.50 × 100)/23000

r = 221750/23000

r ≈ 9.64%