You borrow $18,000 to buy a new car. You will pay $3,240 in simple interest at the end of 6 years. What is the annual interest rate on your purchase? Use the formula: I = Prt.
The answer is: " 3 % " . ______________________________________ Explanation: ______________________________________ Given: I = Prt ; Solve for "r" ; ______________________________________ Rearrange the equation; to isolate "r" on one side of the equation; then plug in our given values to solve for "r" ; _________________________________________________ I = P r t ; _________________________________________________ Divide EACH SIDE of the equation by "P*t" (that is: "(Pt)" ; to get: "r" on one side of the equation ; _________________________________________________
I / Pt = (Prt) / (Pt) ;
to get: I / Pt = r ;
↔ r = I / Pt ;
GIven: Interest = I = 3240 ; Principal = P = 18000 ; time (in "years") = t = 6 ; _________________________________________________ Plug in our given values to solve for " r " ("rate") ; _________________________________________________ r = I / (P t) ;
→ r = 3240 / (18000 * 6) ;
→ r = 3240 / (108000) ;
→ r = 3/100 = 0.03 = 3% __________________________ The answer is: " 3% " . __________________________
