Question

Enrique borrowed $23,500 to buy a car. He pays his uncle 2% interest on the $4,500 he borrowed from him, and he pays the bank 11.5% interest on the rest. What average interest rate does he pay on the total $23,500?

Answer 1

Answer: 9.7%

Explanation:

Answer 2

9.7%

Explanation:

Enrique pays 0.02(4,500)=90 in interest to his uncle.

He pays 0.115(23,500−4,500)=2,185 in interest to the bank.

The total amount of interest he pays is 2,185+90=2,275, which is a rate of

2,27523,500≈0.097

or 9.7%.