Question

you purchase a new guitar and take a loan for $450. you have 18 equal monthly payments of $28 each. what is the simple interest rate for the loan

Answer 1

8%

Explanation:

The amount repaid is ...

A = P(1 +rt)

Filling in the given values, we can find r.

(18·28) = 450(1 +r(18/12)) . . . . . t is in years

504 = 450 + 675t

54/675 = 0.08 = 8%

The simple interest rate on the loan is 8%.