Final answer:
The total interest on a $5,000 loan at a 6% simple interest rate over three years is $900. To find an interest rate that yields $500 on a $10,000 loan over five years, use the simple interest formula to get 1%.
Step-by-step explanation:
To calculate the total amount of interest from a loan using a simple interest rate, the formula is I = P * r * t, where 'I' is the interest, 'P' is the principal amount, 'r' is the rate of interest per year, and 't' is the time in years.
For example:
- To find the total interest on a $5,000 loan at 6% simple interest over three years: I = $5,000 * 0.06 * 3 = $900.
- If you receive $500 in simple interest on a $10,000 loan over five years, the interest rate 'r' can be found by rearranging the formula: r = I / (P * t) = $500 / ($10,000 * 5) = 0.01 or 1%.