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

Answer:

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#