Question

Your bank gives you a special loan of $112,000. At the end of 30 years, you will pay the bank $176,400 in simple interest. What is the annual interest rate on your loan?

Answer 1

5.25

Explanation:

I got this problem on imagine math and I got it right (the second time)

Answer 2

In the given problem there are several information's worth taking note of. Based on these information's the rate on the loan can be calculated.It is already given that the Principal amount is $112000. Time is given as 30 years and the final amount as $176400.
Now we have to find the amount of interest first
Interest amount = (176400 - 112000) dollars
= 64400 dollars
As per the formula of simple interest we know that
Interest = Principal * Rate of interest * Time
Rate of Interest = (Principal * Time)/Interest amount
= (112000 * 30)/64400
= 3360000/64400
= 52.17
So the rate of interest on the loan for the period of 30 years was 52.17%