Question

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

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

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 } * \text {rate} * \text {time}}{100}`

`\begin{array}{l}{\text { Then, } 200=\frac{11000 * \text {rate} * 60}{100} \rightarrow \text { rate }=(200 * 100)/(11000 * 60)} \\\\ {\rightarrow \text { rate }=(2 * 1)/(11 * 6) \rightarrow \text { rate }=(1)/(11 * 3)} \\\\ {\rightarrow \text { rate }=(1)/(33)=0.03}\end{array}`

Hence, the interest rate should be 0.03%.