Question

Use the ordinary interest method to find the rate of interest that Valley Mountain Vineyards pays on a loan of $5,500 for 234 days, if the amount of interest is $345.67. (Round to nearest tenth percent) a. 8.3% b. 10.2% c. 14.5% d. 9.7%

Your Office Supply has a $42,500 line of credit that charges an annual percentage rate of prime rate plus 3%. Their starting balance on March 1 was $10,600. On March 5, they borrowed $7,500. On March 14, the business made a payment of $3,300, and on March 18, they borrowed $5,300. If the current prime rate is 9%, what is the new balance? a. 26100 b. $20,276.10 c. 27583.43 d. 18400.29
Mariann purchases a kitchen set costing $3,480 by taking out an 12% add-on installment loan. The loan requires a 25% down payment and equal monthly payments for 3 years. How much are Mariann's monthly payments? a.92.67 b. 98.60 c. 105.33 d. 126.49
Ted purchased a speedboat costing $15,800 by taking out an installment loan. He made a down payment of $4,000 and financed the balance for 36 months. If the payments are $383.53 each month, find the APR using Table 13-1. a. 8.50% b. 10.00% c.10.50% d. 10.75%
Marjorie bought a home with an adjustable-rate mortgage. The margin on an adjustable-rate mortgage is 2.5% and the rate cap is 7% over the life of the loan. If the current index rate is 5.9%, what is the calculated interest rate of the ARM? a. 9.4% b.8.4% c.10.5% d. 7%

Answer 1

The interest from a $5,000 loan after three years at a 6% interest rate is $900. The interest rate on a $10,000 loan that yielded $500 of interest over five years is 1%.

Step-by-step explanation:

To calculate the total amount of interest from a $5,000 loan after three years with a simple interest rate of 6%, you would use the formula for simple interest which is Interest = Principal × rate × time. In this case, the principal is $5,000, the rate is 6%, or 0.06, and the time is 3 years.

The calculation would be as follows:

• Interest = $5,000 × 0.06 × 3
• Interest = $300 × 3
• Interest = $900

Thus, the total amount of interest from the loan would be $900.

To find the interest rate charged on a $10,000 loan that generated $500 in simple interest over five years, the formula is rearranged to solve for the rate:

Interest = Principal × rate × time

$500 = $10,000 × rate × 5 years

$500 = $50,000 × rate

rate = $500 / $50,000

rate = 0.01 or 1%

The interest rate charged would therefore be 1%.