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Solving a Word Problem for the Rate of Simple Interest on Hang's Loan
Apply the problem-solving strategy to find the rate of simple interest given the principal, interest earned, and time.
Problem: Hang borrowed $7{,}500 from her parents to pay her tuition. In years, she paid them $1{,}500 interest in addition to the $7{,}500 she borrowed. What was the rate of simple interest?
- Read the problem carefully.
- Identify what to find: the rate of simple interest.
- Name the unknown: Let = rate of interest.
- Translate into an equation using the simple interest formula . Given , , and :
- Solve the equation: Multiply 7{,}500 and : Divide both sides by 37{,}500: Change the decimal to percent form:
- Check the result: 1{,}500 stackrel{?}{=} (7{,}500)(0.04)(5) 1{,}500 = 1{,}500 checkmark
- Answer: The rate of interest was .
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