Question

Tran got a loan of $10,000 from the bank to help pay for his new car. He agreed to pay $800 in interest for the use of this money.

Which equation shows the interest rate that Tran is paying?

800 ÷ 10,000 = .08
10,000 ÷ 800 = 12.5
10,000 – 800 = 9,200
10,000 + 800 = 10,800

Answer 1

800 ÷ 10,000 = 0.08

Rate = interest ÷ principal = 800/10,000 = 0.08 = 8%, so the first equation is correct.