Question

Gil borrows $8,000 for college expenses. He will pay a total of $10,280 after 6 years. Gil says the interest rate is at least 5%. Is he correct?

Answer 1

The answer is gill is incorrect he will pay 2280 interest, which corresponds to an interest rate of 4.75

Explanation:

Answer 2

Gil is not correct.

Explanation:

We have been given that Gil borrows $8,000 for college expenses. He will pay a total of $10,280 after 6 years. Gil says the interest rate is at least 5%.

We will use simple interest formula to check whether Gil is right or not.

`A=P*(1+r*t)`, where

A= Final amount after t years.

P= Principal amount.

r= Interest rate in decimal form.

Let us substitute our given values in above formula to find the interest rate.

`10280=8000*(1+r*6)`

`10280=8000+48000*r`

`2280=48000*r`

`r=(2280)/(48000)`

`r=0.0475`

Since r is in decimal form, so let us convert interest rate in percent by multiplying by 100.

`0.0475*100=4.75`

Therefore, the original interest rate is 4.75% which is less than 5%, so Gil is not correct.