Morgan Nunez
06/14/2023 · High School
Vince took out a \( \$ 500 \) loan to buy a new couch. He paid back the loan in 2 years and paid a total of \( \$ 570 \). What was the simple interest rate for his loan?
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Tutor-Verified Answer
Step-by-step Solution
Let's denote the simple interest rate as \( r \) and the principal amount as \( P \).
The formula for calculating the total amount paid back for a simple interest loan is given by:
\[ A = P + P \times r \times t \]
where:
- \( A \) is the total amount paid back,
- \( P \) is the principal amount,
- \( r \) is the interest rate,
- \( t \) is the time in years.
Given:
- \( P = \$500 \),
- \( A = \$570 \),
- \( t = 2 \) years.
We can substitute these values into the formula and solve for the interest rate \( r \).
Solve the equation by following steps:
- step0: Solve for \(r\):
\(570=500+500r\times 2\)
- step1: Multiply the terms:
\(570=500+1000r\)
- step2: Swap the sides:
\(500+1000r=570\)
- step3: Move the constant to the right side:
\(1000r=570-500\)
- step4: Subtract the numbers:
\(1000r=70\)
- step5: Divide both sides:
\(\frac{1000r}{1000}=\frac{70}{1000}\)
- step6: Divide the numbers:
\(r=\frac{7}{100}\)
The simple interest rate for Vince's loan is \( r = 0.07 \) or \( 7\% \).
Quick Answer
The simple interest rate for Vince's loan is 7%.
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