Question

Mr. Sun borrowed $15,600 for 54 months at simple interest to pay for a new swimming pool. If Mr. Sun paid the bank a total of $21,567.00, what was the simple interest rate of the loan?

Answer 1

Given:

Mr. Sun borrowed $15,600 for 54 months at simple interest.

Mr. Sun paid the bank a total of $21,567.00.

To find:

The rate of simple interest.

Solution:

We know that,

12 months = 1 year

1 month = $\dfrac{1}{12}$ year

54 months = $\dfrac{54}{12}$ year

54 months = 4.5 years

Simple interest is:

$S.I.=Amount-Principal$

$S.I.=21567-15600$

$S.I.=5967$

Formula for simple interest is:

$S.I.=\dfrac{P\times r\times t}{100}$

Where, P is principal, r is the rate of interest in percent and t is the number of years.

Putting $S.I=5967,P=15600,t=4.5$, we get

$5967=\dfrac{15600\times r\times 4.5}{100}$

$596700=70200r$

$\dfrac{596700}{70200}=r$

$8.5=r$

Therefore, the rate of simple interest is 8.5%.