Algebra and Trigonometry (6th Edition)
Algebra and Trigonometry (6th Edition)
6th Edition
ISBN: 9780134463216
Author: Robert F. Blitzer
Publisher: PEARSON
Bartleby Related Questions Icon

Related questions

bartleby

Concept explainers

Topic Video
Question
100%
**Loan Interest Rate Calculation Example**

---

**Problem Statement:**

You have agreed to pay off an $8,000 car loan with 24 monthly payments of $400 each. Use the simple interest formula to determine the interest rate that you are being charged.

---

**Detailed Explanation:**

To determine the interest rate using the simple interest formula, follow these steps:

1. **Identify the Known Values:**
   - **Principal (P):** $8,000
   - **Total Number of Payments:** 24
   - **Monthly Payment (M):** $400

2. **Calculate the Total Payment Amount:**
   \[
   \text{Total Payment} = \text{Monthly Payment} \times \text{Number of Payments}
   \]
   \[
   \text{Total Payment} = \$400 \times 24 = \$9,600
   \]

3. **Determine the Total Interest Paid:**
   \[
   \text{Total Interest} = \text{Total Payment} - \text{Principal}
   \]
   \[
   \text{Total Interest} = \$9,600 - \$8,000 = \$1,600
   \]

4. **Use the Simple Interest Formula:**
   The simple interest formula is given by:
   \[
   I = P \times r \times t
   \]
   where:
   - \(I\) is the total interest paid,
   - \(P\) is the principal amount,
   - \(r\) is the annual interest rate,
   - \(t\) is the time period in years.

5. **Plug in the Known Values and Solve for \(r\):**
   Convert the number of payments into years:
   \[
   t = \frac{24}{12} = 2 \text{ years}
   \]
   Now, use the formula:
   \[
   1,600 = 8,000 \times r \times 2
   \]
   \[
   1,600 = 16,000r
   \]
   \[
   r = \frac{1,600}{16,000}
   \]
   \[
   r = 0.10
   \]

6. **Convert the Rate into a Percentage:**
   \[
   r = 0.10 \times 100 = 10\%
   \]
expand button
Transcribed Image Text:**Loan Interest Rate Calculation Example** --- **Problem Statement:** You have agreed to pay off an $8,000 car loan with 24 monthly payments of $400 each. Use the simple interest formula to determine the interest rate that you are being charged. --- **Detailed Explanation:** To determine the interest rate using the simple interest formula, follow these steps: 1. **Identify the Known Values:** - **Principal (P):** $8,000 - **Total Number of Payments:** 24 - **Monthly Payment (M):** $400 2. **Calculate the Total Payment Amount:** \[ \text{Total Payment} = \text{Monthly Payment} \times \text{Number of Payments} \] \[ \text{Total Payment} = \$400 \times 24 = \$9,600 \] 3. **Determine the Total Interest Paid:** \[ \text{Total Interest} = \text{Total Payment} - \text{Principal} \] \[ \text{Total Interest} = \$9,600 - \$8,000 = \$1,600 \] 4. **Use the Simple Interest Formula:** The simple interest formula is given by: \[ I = P \times r \times t \] where: - \(I\) is the total interest paid, - \(P\) is the principal amount, - \(r\) is the annual interest rate, - \(t\) is the time period in years. 5. **Plug in the Known Values and Solve for \(r\):** Convert the number of payments into years: \[ t = \frac{24}{12} = 2 \text{ years} \] Now, use the formula: \[ 1,600 = 8,000 \times r \times 2 \] \[ 1,600 = 16,000r \] \[ r = \frac{1,600}{16,000} \] \[ r = 0.10 \] 6. **Convert the Rate into a Percentage:** \[ r = 0.10 \times 100 = 10\% \]
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Algebra
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, algebra and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Text book image
Algebra and Trigonometry (6th Edition)
Algebra
ISBN:9780134463216
Author:Robert F. Blitzer
Publisher:PEARSON
Text book image
Contemporary Abstract Algebra
Algebra
ISBN:9781305657960
Author:Joseph Gallian
Publisher:Cengage Learning
Text book image
Linear Algebra: A Modern Introduction
Algebra
ISBN:9781285463247
Author:David Poole
Publisher:Cengage Learning
Text book image
Algebra And Trigonometry (11th Edition)
Algebra
ISBN:9780135163078
Author:Michael Sullivan
Publisher:PEARSON
Text book image
Introduction to Linear Algebra, Fifth Edition
Algebra
ISBN:9780980232776
Author:Gilbert Strang
Publisher:Wellesley-Cambridge Press
Text book image
College Algebra (Collegiate Math)
Algebra
ISBN:9780077836344
Author:Julie Miller, Donna Gerken
Publisher:McGraw-Hill Education