Final answer:
The interest rate for a $3000 loan over 6 years with a simple interest total of $720 is 4%.
Step-by-step explanation:
To determine the interest rate for a loan when given the simple interest, principal amount, and time, you can employ the simple interest formula, \(I = Prt\), where \(I\) is the interest, \(P\) is the principal amount, \(r\) is the rate of interest per period, and \(t\) is the time in years.
In this scenario, you have a simple interest (\(I\)) of $720, a principal (\(P\)) of $3000, and a time (\(t\)) of 6 years. Substituting these values into the formula, you get:
\[720 = 3000 \times r \times 6.\]
Now, solve for \(r\):
\[720 = 18000r.\]
Dividing both sides by 18000:
\[r = \frac{720}{18000}.\]
Simplifying the fraction:
\[r = 0.04\] or \(4\%\).
Therefore, the simple interest rate for the loan is \(4\%\). This implies that for each year, the borrower is charged \(4\%\) of the principal amount as interest. Understanding the interest rate is crucial for both borrowers and lenders to assess the cost of borrowing and the returns on lending. In this case, the borrower incurs an annual interest expense of \(4\%\), contributing to the overall cost of the loan.