Question

For a car loan using simple interest at a given​ rate, the amount of interest charged varies jointly with the loan amount​ (also known as the​ principal) and the time of the loan​ (in years). if a $ 15 comma 000 car loan earns ​$2610 in simple interest over 6 ​years, how much interest will a ​$32 comma 000 car loan earn over 8 ​years?

Answer 1

Okay, we start with the formula for simple interest, A = P(1 + rt). However, we are really interested in the p*rt part of the formula. Why? r is the interest rate, p is the principal and t is the time.

Let's solve for r using the first loan info.

We have r*6*15000=2610 ------> r=2.9%. From our calculation the interest is 2.9% per year.

For the $32,000 loan in 8 yrs, the interest amount is 8*2.9%*32000=$7424