Question

Zach borrowed $4000 from his grandfather to buy a used car so he could travel to and from work. After working for 2 years, he has saved $5200 to pay back to his grandfather. At what interest rate did Zach borrow the money? Round to the nearest whole percent.

Answer 1

First you should identify your variables and remember the formula, I=prt ( Interest, Principle, and Rate)

Answer 2

The 2 years is the rate, because it shows time. The 4000 is the principle because that the amount it was borrowed. So if you're just looking for the rate, then I guess you multiply the 2 and 4000 :0 But wait!! The 2 from 2 years must be written as a decimal, so it's .02

Answer 3

I think it's .02.. I can't remember exactly..

Answer 4

Oh I left out a piece of information. Ignore what I just said. I'll get back to solving it

Answer 5

its either 12 % 15% 18 % or 38 %

Answer 6

oh okay thank you

Answer 7

np

Answer 8

I really don't know what to do. Sorry! I'll come back to this question later if it's still opened.. I 'm stuck on it too!

Answer 9

This might help : http://www.teacherschoice.com.au/maths_library/money/simple_interest.htm

Answer 10

Ok, so the way you need to do this is as how @Studybug123 started it. Your $5,200 is the Principle, the Time is 2 (I assume it's not compounding interest), and you're looking for I (the interest rate).

Answer 11

Whoops - the $4,000 is the P, not the 5,200. So, can you set up that equation now?

Answer 12

So I was kind of on the right track?

Answer 13

I dont understand):

Answer 14

Absolutely @Studybug123 - that's the right equation to use. Well done :)

Answer 15

Thank you :)

Answer 16

ive never done these before

Answer 17

Well then I guess you're gonna learn something NEW today! :)

Answer 18

Ok, so the equation you need to use is I = PRT.

I = the amount more than what you borrowed you pay back (hint: 5,200 - 4,000)
P = original amount you borrowed
R = Rate at which you borrowed (this is the one you have to solve for)
T = Time (how many years was it?)

So, try and set that up (don't worry we'll both help)

Answer 19

wouldnt it be

5200=4000*rate*2

Solve for rate?

Answer 20

That's what I kinda of thought @timo86m

Answer 21

5200/(4000*2)=rate

Answer 22

but there's no answer choice for that

Answer 23

Hmm, so say the interest rate was 10% @timo86m wouldn't that give you this:

5200 = 4,000 x 10% x 2

So that's not correct, right?

Answer 24

I believe they are asking for the interest rate as in percent, not a value of the money.. That's why I got confused

Answer 25

@amberose10 - are you able to take a guess at how to set up the equation?

Answer 26

@Studybug123

The I is an amount of money, the R is a percent

Answer 27

Yes I know that and the answer choices ask in percent, so you have to find the Rate, right?

Answer 28

the choice awsners are in percents .

Answer 29

i know its 4000 x rATE X 2

Answer 30

= 5200

Answer 31

@amberose10

Almost - the I is the interest - so it's 5200 - 4000. The interest is the amount MORE than the principle you have to pay back, make sense?

Answer 32

so 1200 ?

Answer 33

its either 12 % 15% 18 % or 38 %

Answer 34

4000=5200*rate*2
sfrate

Answer 35

4000/(5200*2)=rate i got .38% anyone else got that?

Answer 36

Oh I see. I got that too if you do it that way

Answer 37

I think I got my variables confused and set up the wrong way

Answer 38

thanks tim !

Answer 39

@amberose10 really really learn the vocabulary the math is easy it is the vocabulary that is hard.

Answer 40

thanks to everyone !

Answer 41

http://math.about.com/od/businessmath/ss/Interest.htm

Answer 42

The formula is Interest divided by principle times the time.

Answer 43

got it .

Answer 44

so yeah I guess just plug it in. I mixed up by variables

Answer 45

Interest divided by principle times the time is to find the rate ONLY. Keep that in mind.

Answer 46

http://www.teacherschoice.com.au/maths_library/money/simple_interest.htm This website gives you the 3 different formulas to find interest, rate, and time

Answer 47

So, what I got was this:

1200 = 4000 x R x 2 I = PxRxT
1200 = 8000 x R
1200/8000 = R

@amberose10 - Do you understand how I got that? The answer isn't 38% fyi...

Answer 48

yes im following ...

Answer 49

its 15 %

Answer 50

@timo86m - almost, I think you just got the variables mixed up.

P = 4,000 (original amount)
I = 1,200 (the difference between the principal and the amount owed) - in this case 5200 - 4000

R = Rate
T = Time

So, in your example, it should have been 1200/8000 - 5,200 is never in the equation.

Good work though!

Answer 51

Yup, you got it @amberose10

Answer 52

yay ! thanks !