Question

1. kaylee obtains a loan with simple interest to buy a car that costs $9,500. if kaylee pays $1,020 in interest during the four - year term of the loan, what was the rate of simple interest?

Explanation:

Step1: Recall simple interest formula

The simple interest formula is $I = P \times r \times t$, where $I$ is interest, $P$ is principal, $r$ is annual interest rate, $t$ is time in years.

Step2: Identify given values

$I = \$1020$, $P = \$8500$, $t = 4$ years

Step3: Rearrange formula to solve for $r$

$r = \frac{I}{P \times t}$

Step4: Substitute values and calculate

$r = \frac{1020}{8500 \times 4} = \frac{1020}{34000} = 0.03$

Step5: Convert to percentage

$r = 0.03 \times 100\% = 3\%$

Answer:

The annual simple interest rate is 3%