Final answer:
The interest rate is found by dividing the total interest by the product of the principal amount and the time in years. With a $200 interest on a $1000 loan over 3 years, the interest rate is 6.7%.
Step-by-step explanation:
To find the interest rate of a loan when you know the principal amount, the total interest paid, and the time period, you can use the simple interest formula: I = PRT, where I is the interest, P is the principal amount, R is the rate of interest per year, and T is the time in years. In this case, you borrowed $1000 (P) for 3 years (T) and owe $200 in interest (I).
Solving for R, we get:
R = I / (PT)
Substituting the given values, we find:
R = $200 / ($1000 × 3)
R = $200 / $3000
R = 0.0667
The interest rate R is therefore approximately 6.7%. Hence, the correct answer among the given choices is a. 6.7%.