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?

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Answer 1 · 2017-04-23T04:00:58

The rate of Simple Interest is $6%$ .

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 $60,000$ .

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

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

$36/6=R$

$6=R$