Mario borrows $4800 for 8.5 years at a fixed rate of simple interest. At the end of that time, he owes $8000. What interest rate is he being charged?

Question

Mathematics

Carleigh Mendez

19 May, 19:11

Mario borrows $4800 for 8.5 years at a fixed rate of simple interest. At the end of that time, he owes $8000. What interest rate is he being charged?

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Lauryn Jarvis · Answer 1

The unknown is the interest rate.

The givens are the principal=$4800, time=8.5 years and amount=$8000 (to find the interest, subtract the principal from the amount,$8000-$4800=$3200) so interest is $3200

The formula for finding rate is R=I*100/PT where R is rate, I is interest and P is principal and T is time. the 100 is there because R is a percentage.

R=$3200*100/$4800*8.5=7.8% (rounded to nearest tenth)

Therefore the interest rate is about 7.8%