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Today, 05:58

A newly married couple took out a 5-year $30,000 loan for their wedding. After 5 years, they paid a total of $32,800 back to the bank. What was the interest rate on the loan?

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  1. Today, 08:19
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    Interest = Future value - Principal

    I = $ 32800 - $ 30000 = $ 2800
  2. Today, 08:56
    0
    Interest at the end of 5 years. Time = 5 years, Principal = $30000

    I = 32800 - 30000 = 2800.

    Assuming simple interest.

    I = PRT

    2800 = 30000*R * 5

    30000*R * 5 = 2800

    R = 2800 / (30000*5)

    R ≈ 0.018667

    R ≈ 1.8667 %

    Interest ≈ 1.8667% per year.
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