Question 486520
If you owe $30,000 for a loan and your interest payment is $125 per month. What is the annual interest rate?


Since the interest is $125 per month, then amount of interest paid per year is: 125 * 12 months = $1,500 per year


Simple interest = PTR, where P = principal, T = time, and R = rate (interest)


1,500 = $30,000 * 1 * R


1,500 = 30,000R


R, or rate of interest = {{{1500/30000}}} = {{{1/20}}}, or .05, or {{{highlight_green(5)}}}%.