Consider the statement The interest rate on auto loans has i

Consider the statement \"The interest rate on auto loans has increased 50% over the past decade and now stands at 9%.\" What can you conclude? a. The interest rate a decade ago was 6%. b. The interest rate a decade ago was 41%. c. You can\'t conclude anything, because the statement makes no sense.

Solution

Given the interest rate on loans has was increased by 50% over past decade

let the interest rate on auto loans in past decade be =r

now present interest rate wil be =(1+50/100)r

present interest rate wil be=150/100=1.5r

given 1.5r=9

r=9/1.5=6

the interest rate on auto loans in past decade=6%