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Joe took out a car loan for $12,000. He paid $4,800 in interest at a rate of 8% per year. How many years will it take him to pay off the loan?
Using the easy interest formula Interest = principal × rate × time, or I = prt, substitute p = $505, r = .05 (the interest rate as a decimal) and t = 4; I = (505)(.05)(4). Multiply to obtain a result of I = $101.
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