SOLUTION: Larry is starting a small business and needs a loan. The bank offers Larry a $10,000 discounted loan at 4.5% for 7 years. What is the value of the proceeds Larry will get from the

Question 1101346: Larry is starting a small business and needs a loan. The bank offers Larry a $10,000 discounted loan at 4.5% for 7 years. What is the value of the proceeds Larry will get from the bank?
Proceeds = $6850
What is the equivalent simple interest Larry will be paying over the 7 years of his loan? Give your answer as a decimal rounded to the thousandths place.
Answer:____ (work for this problem and my process for the problem is shown below).

I'm not sure what I am doing wrong given that I used I= P X r X t, where p= $10,000, r= 4.5% and t= =7. I then set it up as I= $10,000 * 4.5 * 7 divided by 100 = 315,000/100 and I= 3,150. I then took that $3,500 and put it into the formula above. So then it was set up as: $10,000 - 3,150= 6,850. As a result, I had $3,500 = $6,850 * (r) * (7). Which then left me as 31,500/6,850= .4598540146/7. But when I originally put that R=.0656934307 or.066. That turned out to be wrong. So I tried a different answer where I divided and that was wrong to 3,150 by 3,150 on one side and on the other, I had the 6,850 (.045) * (7) and then divide that answer by 3,150. Thus, I had 3,150 divided by 308.25. Which resulted in r= 10.2189781. Which I rounded off to 10.219. But that was wrong too apparently. So am I just rounding off wrong, or where am I making a mistake?
Found 2 solutions by stanbon, richwmiller:
Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
Larry is starting a small business and needs a loan. The bank offers Larry a $10,000 discounted loan at 4.5% for 7 years. What is the value of the proceeds Larry will get from the bank?
Proceed = 10000 - Interest
.
Proceeds = 10000- 10000*0.045*7 = 10000-3150 = 6850
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What is the equivalent simple interest Larry will be paying over the 7 years of his loan? Give your answer as a decimal rounded to the thousandths place.
Answer:
I = P*r*t
Solve for r when I = 3150 ; P = 6850; and t = 7 yrs
3150 = 6850*r*7
r = 0.06569...
r = 0.0657 or 6.57%
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Sorry for the earlier errors.
Cheers,
Stan H.
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Answer by richwmiller(17219) (Show Source): You can put this solution on YOUR website!
pro�ceeds
ˈprōˌsēdz
noun
money obtained from an event or activity.
"proceeds will help purchase new equipment"
synonyms: profits, earnings, receipts, returns, takings, take, income, revenue, royalty; gate (money/receipts)
"most of the proceeds go to pay salaries"
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