Question

20. You really want to buy a used car for $11,000, but can only afford $200 a month. What

Answer 1

The interest rate would you need to find to be able to afford the car, assuming the loan is for 60  months is 0.03%.

Solution:

Given, You really want to buy a used car for $11,000, but can only afford $200 a month.  

We have to find what interest rate would you need to find to be able to afford the car, assuming the loan is for 60 months?

Now, amount = 11000, simple interest = 200, time period = 60 months.

We know that,

$\text { simple interest }=\frac{\text { amount } \times \text {rate} \times \text {time}}{100}$

$\begin{array}{l}{\text { Then, } 200=\frac{11000 \times \text {rate} \times 60}{100} \rightarrow \text { rate }=\frac{200 \times 100}{11000 \times 60}} \\\\ {\rightarrow \text { rate }=\frac{2 \times 1}{11 \times 6} \rightarrow \text { rate }=\frac{1}{11 \times 3}} \\\\ {\rightarrow \text { rate }=\frac{1}{33}=0.03}\end{array}$

Hence, the interest rate should be 0.03%.