Question

after finally paying off the loan for your car, you forgot how long you have been paying for it. after looking at the documents, you see that the loan was for 8,000 with an interest rate of 4% and you paid 1,600 in interest. how many years did you have the loan for?

Answer 1

The formula for calculating the simple interest is the following:

$I=Prt$

Where:

$\begin{gathered} I=\text{interest} \\ P=\text{present value} \\ r=\text{interest rate} \\ t=\text{time} \end{gathered}$

Solving for the time we get:

$t=\frac{I}{Pr}$

Replacing the known values:

$t=\frac{1600}{(8000)(0.04)}$

Solving the operations:

$t=5$

Therefore, the loan lasted 5 years.