you want to buy a new car. the bank offers you a loan for $30,000 at a 3% interest rate. you are willing to pay $4,500 in interest over the life of the loan.

using a simple interest calculation, how many years must you pay off the loan to meet your goal?

7 years
5 years
3 years
6 years

Question

you want to buy a new car. the bank offers you a loan for $30,000 at a 3% interest rate. you are willing to pay $4,500 in interest over the life of the loan.

using a simple interest calculation, how many years must you pay off the loan to meet your goal?

7 years
5 years
3 years
6 years

Accepted Answer

{ "quality": "clear", "question_count": 1, "skills_matched": [ "step_cot", "multiple_choice_formatter", "explain_then_answer", "tutor", "mastery_adaptive_brevity" ], "needs_drawing": false, "concepts_used": [ "Simple Interest Formula" ], "new_concepts": [], "current_concepts": [ "Simple Interest Formula", "Financial Decision Making" ] } ## Identify the given values Using the *Simple Interest Formula* knowledge point $$ \begin{aligned} P &= \$30,000 \quad \text{(Principal loan amount)} \ r &= 3\% = 0.03 \quad \text{(Annual interest rate)} \ I &= \$4,500 \quad \text{(Total simple interest to be paid)} \end{aligned} $$ ## Solve for the time period Using the *Simple Interest Formula* knowledge point $$ \begin{aligned} I &= P \cdot r \cdot t \ 4500 &= 30000 \cdot 0.03 \cdot t \ 4500 &= 900 \cdot t \ t &= \frac{4500}{900} = 5 \text{ years} \end{aligned} $$

7 years

5 years

3 years

6 years

{ "subject": "Mathematics", "question_type": "Multiple Choice", "knowledge_point": [ "Mathematics", "Algebra", "Simple Interest Formula" ] }

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Question

Explanation:

Identify the given values

Solve for the time period

Answer: