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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?.

Verified Answer :

olemakpadu

Simple Interest, I = PRT/100

3240 = 18 000 R 6 /100

3240 = 180R6

3240 / (180*6) = R          Use your calculator

3 = R

The annual interest rate is 3%.

Answer:

Annual Interest Rate on purchase is 3 %.

Step-by-step explanation:

Principal, P = $ 18000

Simple Interest , SI = $ 3240

Time , T = 6 years

Let R be the interest rate.

Using Simple interest formula we get,

\(SI=\frac{P\times R\times T}{100}\)

\(3240=\frac{18000\times R\times6}{100}\)

\(3240=1080\times R\)

\(R=\frac{3240}{1080}\)

\(R=3\)

Therefore, Annual Interest Rate on purchase is 3 %.

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