Question

Manny pays 10% interest on his $42,000 college loan and 7% intereston his $14,000 car loan. Whataverage interest rate does he pay on the total $56, 000 he owes?

Answer 1

Answer

9.25%

Explanation

Given:

Manny college loan = %42,000

Interest on college loan = 10%

Manny car loan = $14,000

Interest on car loan = 7%

Manny total loan = $56,000

What to find:

The average interest rate he pays on the total $56,000 he owes.

Step-by-step solution:

For Manny's college loan, the amount paid in interest will be

$\frac{10}{100}\times\ 42,000=\ 4,200$

For Manny's car loan, the amount paid in interest will be

$\frac{7}{100}\times\ 14,000=\ 980$

Therefore, the average interest rate he pays on the total $56, 000 he owes will be

$\frac{\ 4,200+\ 980}{\ 56,000}\times100\%=\frac{\ 5180}{\ 56,000}\times100\%=9.25\%$

The average interest rate he pays on the total $56,000 he owes is 9.25%