Question

You borrow $18,000 to buy a new car. You will pay $3,240 in simple interest at the end of 6 years. What is the annual interest rate on your purchase?.

Answer 1

Answer:

Annual Interest Rate on purchase is 3 %.

Step-by-step explanation:

Principal, P = $ 18000

Simple Interest , SI = $ 3240

Time , T = 6 years

Let R be the interest rate.

Using Simple interest formula we get,

$SI=\frac{P\times R\times T}{100}$

$3240=\frac{18000\times R\times6}{100}$

$3240=1080\times R$

$R=\frac{3240}{1080}$

$R=3$

Therefore, Annual Interest Rate on purchase is 3 %.

Answer 2

Simple Interest, I = PRT/100

3240 = 18 000 * R * 6 /100

3240 = 180*R*6

3240 / (180*6) = R          Use your calculator

3 = R

The annual interest rate is 3%.