Question

Linda borrowed $6000 from a bank for 4 years and was charged simple interest. The total interest that she paid on the loan was $1680. As a percentage, what

was the annual interest rate of her loan?

Answer 1

Linda paid a total interest rate of 28% over the 4-year period of the loan.

Explanation:

As the interest is simple interest, we can use the formula:

Interest = Principal x Rate x Time

where Principal is the initial amount borrowed, Rate is the interest rate per year, and Time is the duration of the loan in years.

In this case, we know that Linda borrowed $6000, paid $1680 in interest, and took the loan for 4 years. Therefore, we can rearrange the formula to solve for the rate:

Rate = Interest / (Principal x Time)

Rate = $1680 / ($6000 x 4)

Rate = 0.07 or 7%

So Linda was charged an annual interest rate of 7%. To express this as a percentage for the entire 4-year period, we can simply multiply by 4:

Total interest rate = 4 x 7% = 28%

Therefore, Linda paid a total interest rate of 28% over the 4-year period of the loan.

Answer 2

7%

Explanation:

money borrowed= $6000

time = 4yrs

interest paid= $1680

rate of interest= ?

we know that ,

I = P * R * t /100

substitute the respective values,

$1680 = $6000 * r * 4 /100

r = 1680/(60*4)

r = 7

hence the rate of interest was 7%

and we are done!