Question

Sally borrowed $9,000 from the bank to buy a new car. She has to pay back the money in 5 years. After 5 years, she will owe $1,800 in interest.What the simple interest rate on her loan?

Answer 1

The simple interest rate on Sally's $9,000 loan, after she paid $1,800 in interest over 5 years, is 4% per year.

Step-by-step explanation:

To find the simple interest rate on Sally's loan, we can use the formula for simple interest: Interest (I) = Principal (P) × Rate (R) × Time (T). Sally borrowed $9,000 (the principal), is paying back $1,800 in interest, and the loan term is 5 years. To find the rate:

I = P × R × T
$1,800 = $9,000 × R × 5

To solve for R, divide both sides by the principal and time:

R = $1,800 / ($9,000 × 5)
R = $1,800 / $45,000
R = 0.04

After converting the decimal to a percentage, we find that the interest rate is 4% per year.