Question

Rachel had a loan for $4,000 loan for 4 years.

She paid a total of $608 in simple interest over the 4 years.
What was the annual interest rate for the loan?

Answer 1

9514 1404 393

Answer:

3.8%

Explanation:

The interest on a simple-interest loan is ...

I = Prt

where P is the principal value, r is the annual rate, and t is the number of years.

Solving for r, we get ...

r = I/(Pt) = 608/(4000×4) = 0.038 = 3.8%

The annual interest rate for the loan was 3.8%.