Final answer:
To calculate the overall interest rate paid on two loans with different rates, add the total interest from both loans and divide by the sum of the loans. Dominic pays a 9.5% average interest rate across his $29,000 total debt.
Step-by-step explanation:
The student is asking how to calculate the overall interest rate Dominic pays on the total amount he owes from two different loans with varying interest rates. To find this, we compute the total interest paid for each loan and then use that to find the average interest rate across the total debt.
The interest Dominic pays on his college loan is 9% of $12,000, which is $1,080. On his car loan, he pays 10% of $17,000, which is $1,700. The total interest paid is $1,080 + $1,700 = $2,780.
Now, to find the average interest rate on the total debt ($29,000), we divide the total interest paid ($2,780) by the total amount borrowed ($29,000), and then multiply by 100 to get the percentage:
Total Interest Rate = (Total Interest Paid / Total Amount Borrowed) × 100
Total Interest Rate = ($2,780 / $29,000) × 100 = 9.58% approximately.
Thus, the correct answer would be B. 9.5%.