Question

Liam borrowed a total of $\$ 35,000$ to pay for college. He pays his parents $3 \%$ interest on the $\$ 8,000$ he borrowed from them and pays the bank $6.8 \%$ on the rest. What average interest rate does he pay on the total $\$ 35,000 ?$ (Round your answer to the nearest tenth of a percent.)

Name: Problem 204, Chapter 3: Elementary Algebra
Uploaded: 2021-09-14T15:27:20-08:00
Duration: 1 min 8 s
Channel: Gerry Hsu
Description: Liam borrowed a total of 35,000 to pay for college. He pays his parents 3 % interest on the 8,000 he borrowed from them and pays the bank 6.8 % on the rest. What average interest rate does he pay on the total 35,000 ? (Round your answer to the nearest tenth of a percent.)

   Liam borrowed a total of $\$ 35,000$ to pay for college. He pays his parents $3 \%$ interest on the $\$ 8,000$ he borrowed from them and pays the bank $6.8 \%$ on the rest. What average interest rate does he pay on the total $\$ 35,000 ?$ (Round your answer to the nearest tenth of a percent.)

Elementary Algebra

Lynn Marecek 2nd Edition

Chapter 3, Problem 204

Instant Answer

Solved by Expert Gerry Hsu

09/14/2021

Step 1

He pays $3\%$ interest on the $\$8,000$ he borrowed from his parents and $6.8\%$ interest on the $\$27,000$ he borrowed from the bank. The interest he pays his parents is $8000 \times 0.03 = \$240$ and the interest he pays the bank is $27000 \times 0.068 = Show more…

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Liam borrowed a total of $\$ 35,000$ to pay for college. He pays his parents $3 \%$ interest on the $\$ 8,000$ he borrowed from them and pays the bank $6.8 \%$ on the rest. What average interest rate does he pay on the total $\$ 35,000 ?$ (Round your answer to the nearest tenth of a percent.)

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Key Concepts

Percentage Calculations

Percentage calculations involve converting percentages to decimals for accurate arithmetic operations such as multiplication and addition. This is essential when applying different interest rates to parts of a total amount and then combining the results to find an average.

Interest Rates

Interest rates are percentages that represent the cost of borrowing money or the income from lending it. In this context, different parts of a loan can have different interest rates, affecting the overall cost of the loan.

Weighted Average

The weighted average is a method of calculating a single overall value from various values that have different levels of importance. In finance, it is used to determine the overall interest rate when different parts of a loan are subject to different rates by multiplying each rate by the proportion of its corresponding amount and then summing these products.

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