Question

2. Luke borrowed $15,000 to pay his college tuition. After he graduates, he will repay the loan along with simple interest. After 2 years, Luke will owe a total of $17,250. What is the simple interest rate on Luke's loan

Answer 1

7.5%

Step-by-step explanation:

Given: Principal amount = $15,000

Time =- 2 years

Final Amount (Principal + interest)= $17,250

Interest = Final Amount - Principal amount

= $ ( 17250 - 15000 )

= $ 2250

Formula for interest : principal x rate x time

`2250 = 15000 X rateX2`

→
`rate = (2250)/(15000X2)`

⇒
`0.075`

⇒
`rate = 0.075 X 100`‰
`= 7.5`‰

Hence, the simplest interest rate on lukes loan =7.5%