Calculate the interest rate of a $12000 loan when it's simple interest after 5 years is $3000.
We can start with the simple interest formula:
With I=3000, P=12,000 and t=5, we can substitute these values into the formula as shown:
Now we have, 60000r = 3000. To find r, we have to divide both sides of the equation with 60000. This is shown below:
Hence, we have, r = 0.05. It is better to express 0.05 in percent. To do so, we multiply 0.05 with 100% as shown:
The calculated interest rate is 5%. Clearly, the answer is D.
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