Question

jamerra received a $3,00 car loan. she plans on paying off the loan in 2 years. at the end of 2 years, jamerra will have paid $450 in interest. what is the simple intrest rate on the car loan?

Answer 1

The rate of interest is 75 % per year

Solution:

Given that, Jamerra received a $3,00 car loan

she plans on paying off the loan in 2 years

Jamerra will have paid $450 in interest

Therefore, we get

Principal = $ 300

Number of years = 2

Simple Interest = $ 450

Rate of interest = ?

The simple interest is given by formula:

$simple\ Interest = \frac{p \times n \times r}{100}$

Where,

"p" is the principal and "n" is the number of years and "r" is the rate of Interest

Substituting the given values we get,

$450 = \frac{300 \times 2 \times r}{100}\\\\450 = 3 \times 2 \times r\\\\6r = 450\\\\r = \frac{450}{6}\\\\r = 75$

Thus rate of interest is 75 % per year