Question

Joel borrowed 518,000 for 6 years at simple interest to purchase a vehicle. If Joel repaid a

total of $20,953.80, at what rate did he borrow the money?

Answer 1

2.735%

Explanation:

The amount due on principal P after t years at rate r is ...

A = P(1 +rt)

Filling in the given values, we can solve for r:

20,953.80 = 18000(1 +6r)

20953.80/18000 -1 = 6r = 0.1641

r = 0.1641/6 = 0.02735 = 2.735%

Joel's interest rate was 2.735%.