My cousin borrowed $15,000 for a new car loan for 5 years. He told me that at the end of the loan, he had paid $21,000 for the interest and principal. What was the rate of the loan? A. 7% B. 8% C. 9% D. 10%

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Answer 1 · 2018-06-20T00:57:58

I got #8%#

I interpreted the question like this:

The total interest payed will be:

#$21,000-$15,000=$6000#

that gives each year:

#($6,000)/5=$1,200#

we use a proportion to write it in terms of #%#:

#$15,000:$1200=100%:x%#

rearrange:

#x%=(cancel($)1,200*100%)/(cancel($)15,000)=8%#

Answer 2 · 2018-06-20T01:00:56

The answer is none of the choices you listed. But if we were to keep going down of doing the same process, it would be 40% of the loan rate.

7% interest

#7/100=0.07#
#15,000*0.07=1,050#
#15,000+1,050=16,050#

8% interest

#8/100=0.08#
#15,000*0.08=1,200#
#15,000+1,200=16,200#

9% interest
#9/100=0.09#
#15,000*0.09=1,350#
#15,000+1,350=16,350#

10% interest
#10/100=0.10#
#15,000*0.10=1,500#
#15,000+1500=16,500#

So it really none of the selected choices you listed.

So if we were to keep doing of listing percentages, we eventually found out that:

40% interest
#40/100=0.40#
#15,000*0.40=6,000#
#15,000+6,000=21,000#