Question

Jake received a student loan for $12000. He plans on paying off the loan in 5 years, Jake will have paid $3600 in interest. What is the simple interest rate in the student loan?

Answer 1

6%
You want to calculate the interest on $12000 at 6% interest per year after 5 year(s).

The formula we'll use for this is the simple interest formula, or:

Where:

P is the principal amount, $12000.00.
r is the interest rate, 6% per year, or in decimal form, 6/100=0.06.
t is the time involved, 5....year(s) time periods.
So, t is 5....year time periods.

To find the simple interest, we multiply 12000 × 0.06 × 5 to get that:

The interest is: $3600.00