Jake received a student loan for $12,000. He plans on paying off the loan in 5 years. At the end of 5 years, Jake will have paid $3,600 in interest. What is the simple interest rate on the student loan?

1 Answer
Apr 23, 2017

The rate of Simple Interest is 6%.

Explanation:

The formula for calculating Simple Interest is:

SI=(PxxRxxT)/100 where SI=Simple Interest, P=Princpal amount, R=Rate of Interest, and T=Time in years.

To determine the rate of Simple Interest on Jake's student loan, we fill in the known variables.

3,600=(12,000xxRxx5)/100

3,600=(60,000xxR)/100

Multiply both sides by 100.

360,000=60,000xxR

Divide both sides by 60,000.

(360,000)/(60,000)=R

(36cancel(0,000))/(6cancel(0,000))=R

36/6=R

6=R