Question

if shelia paid $797.50 in interest on a 5 year loan of $5,800 for her first car, what was the interest rate

Answer 1

Answer: interest rate is 68.75%

Given data:

Interest = $797.50

time = 5 years

Principal loan = $5800

`\begin{gathered} \text{Interest = }\frac{\text{ interest rate}}{nu\text{mber of payments}}\text{ x loan principal} \\ 797.50\text{ =}\frac{\text{ interest rate}}{5}\text{ x 5800} \\ 797.50\text{ = }\frac{\text{ interest rate x 5800}}{5} \\ \text{Cross multiply} \\ 797.50\text{ x 5 = interest rate x 5800} \\ 3987.5\text{ = interest rate x 5800} \\ \text{Divide both sides by 5800} \\ \text{ interest rate = }(3987.5)/(5800) \\ \text{ interest rate = 0.6875} \\ \text{ interest rate = 68.75\%} \end{gathered}`