Assume that all interest is simple interest. Fred started a new e-Commerce business and borrowed $14,800 for 10 years to get the business up and running. The interest is $4440. Find the rate. Round to two decimal places, if necessary. The interest rate for Fred's loan is X
Assume that all interest is simple interest. Fred started a new e-Commerce business and borrowed $14,800 for 10 years to get the business up and running. The interest is $4440. Find the rate. Round to two decimal places, if necessary. The interest rate for Fred's loan is X
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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![**Simple Interest Calculation**
**Problem Statement:**
Fred started a new e-Commerce business and borrowed $14,800 for 10 years to get the business up and running. The interest is $4,440. Find the rate. Round to two decimal places, if necessary.
**Question:**
The interest rate for Fred's loan is _____%.
**Instructions:**
Assume that all interest is simple interest. Use the formula for simple interest to determine the interest rate.
**Simple Interest Formula:**
\[ I = P \times R \times T \]
Where:
- \( I \) = Interest
- \( P \) = Principal amount (initial loan)
- \( R \) = Rate of interest per year (as a decimal)
- \( T \) = Time (in years)
Given:
- \( I = 4,440 \)
- \( P = 14,800 \)
- \( T = 10 \) years
**Steps to Find the Rate:**
1. Substitute the known values into the simple interest formula:
\[ 4,440 = 14,800 \times R \times 10 \]
2. To isolate \( R \), divide both sides of the equation by \( 14,800 \times 10 \):
\[ R = \frac{4,440}{14,800 \times 10} \]
3. Calculate the value of \( R \).
**Final Calculation:**
\[ R = \frac{4,440}{148,000} \]
\[ R = 0.03 \]
**Convert the Rate to a Percentage:**
\[ R \times 100 = 3\% \]
**Answer:**
The interest rate for Fred's loan is **3.00%**.
**Additional Resources:**
To further understand simple interest and practice more problems, students can refer to the supplementary materials provided on our website.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Faf54cc92-fe70-42ec-a5a5-6c03b8447a69%2F9ca1bf5a-b2f9-423a-b3fb-8307b699d693%2Fonoeiek_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Simple Interest Calculation**
**Problem Statement:**
Fred started a new e-Commerce business and borrowed $14,800 for 10 years to get the business up and running. The interest is $4,440. Find the rate. Round to two decimal places, if necessary.
**Question:**
The interest rate for Fred's loan is _____%.
**Instructions:**
Assume that all interest is simple interest. Use the formula for simple interest to determine the interest rate.
**Simple Interest Formula:**
\[ I = P \times R \times T \]
Where:
- \( I \) = Interest
- \( P \) = Principal amount (initial loan)
- \( R \) = Rate of interest per year (as a decimal)
- \( T \) = Time (in years)
Given:
- \( I = 4,440 \)
- \( P = 14,800 \)
- \( T = 10 \) years
**Steps to Find the Rate:**
1. Substitute the known values into the simple interest formula:
\[ 4,440 = 14,800 \times R \times 10 \]
2. To isolate \( R \), divide both sides of the equation by \( 14,800 \times 10 \):
\[ R = \frac{4,440}{14,800 \times 10} \]
3. Calculate the value of \( R \).
**Final Calculation:**
\[ R = \frac{4,440}{148,000} \]
\[ R = 0.03 \]
**Convert the Rate to a Percentage:**
\[ R \times 100 = 3\% \]
**Answer:**
The interest rate for Fred's loan is **3.00%**.
**Additional Resources:**
To further understand simple interest and practice more problems, students can refer to the supplementary materials provided on our website.
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