Question

Jessica takes out a loan for her college tuition from a bank that charges simple interest at an annual rate of 6.4% . her loan is for 5300 for 7 months. assume each month is 1/12 of a year. answer each part below. do not round any intermediate computations, and round your final answers to the nearest cent.

Answer 1

To calculate interest from a loan using simple interest, use the formula Interest = Principal × Rate × Time. For a $5,000 loan at 6% for three years, the interest is $900. To find the rate for a $10,000 loan that generated $500 over five years, the rate is 1%.

Step-by-step explanation:

The question is about calculating simple interest and understanding the variables and equations involved in such financial mathematics problems. In the context provided, the student is presented with multiple scenarios requiring the application of the simple interest formula, which is Interest = Principal × Rate × Time.

1. To find the total interest from a $5,000 loan after three years at a simple interest rate of 6%, you use the formula like so: Interest = $5,000 × 0.06 × 3 = $900.
2. If $500 in simple interest was received on a $10,000 loan over five years, the interest rate charged can be found by rearranging the formula: Rate = Interest / (Principal × Time) = $500 / ($10,000 × 5) = 0.01 or 1%.

These examples demonstrate calculations based on the formula for simple interest and are indicative of typical high school-level mathematics problems.