A loan worth $1000 collects simple interest each year for 6 years. At the end of that time, a total of $1270 is paid back. Determine the percentage rate for this loan?
A loan worth $1000 collects simple interest each year for 6 years. At the end of that time, a total of $1270 is paid back. Determine the percentage rate for this loan?
Answer:
The percentage rate is 4.5%
Step-by-step explanation:
The simple interest earned in this situation is $1270 – $1000, or $270.
the simple interest formula is i =prt.
Here, i = $270 = ($1000)(r)(6 yr).
$270
Then r = ——————- = 0.045
$1000(6 yr)
The percentage rate is 4.5%