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Mr
Mr. Barboza needed to take a loan out for a new car. The principal amount of his loan was $23.580. He paid the loan off after 3 years, and paid a total of $32,068.80 for the principal and interest. What was his annual loan interest rate?
Expert Solution
Computation of Interest Rate on Loan:
Amount = Principal*(1+Rate)^Time
$32,068.80 = $23,580*(1+Rate)^3 years
$32,068.80/$23,580 = (1+Rate)^3 years
1.3600 = (1+Rate)^3 years
1+Rate = 1.3600^(1/3)
Rate = 1.1079 - 1
Rate = 0.1079 or 10.79%
So, Annual Loan Interest Rate is 10.79%.
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