# 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?

Apr 23, 2017

The rate of Simple Interest is 6%.

#### Explanation:

The formula for calculating Simple Interest is:

$S I = \frac{P \times R \times T}{100}$ where $S I =$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.

$3 , 600 = \frac{12 , 000 \times R \times 5}{100}$

$3 , 600 = \frac{60 , 000 \times R}{100}$

Multiply both sides by $100$.

$360 , 000 = 60 , 000 \times R$

Divide both sides by $60 , 000$.

$\frac{360 , 000}{60 , 000} = R$

$\frac{36 \cancel{0 , 000}}{6 \cancel{0 , 000}} = R$

$\frac{36}{6} = R$

$6 = R$