Question

1. A 180-day simple interest loan in the amount of $16, 400 will be paid in full in the amount of $16, 851. Find the interest rate of

the loan. Use the banker's method, which uses 360 days in a year.
OR=5.5%
OR=5.0%
OR=4.5%
R= 6.0%

Answer 1

Using the banker's method, we can use the following formula to find the interest:

Interest = (Principal x Rate x Days) / 360

Where,

Principal = $16,400

Amount = $16,851

Days = 180

We know that the interest plus the principal equals the amount, so we can set up the following equation:

Interest + Principal = Amount

Substituting the values:

(16,400 x Rate x 180) / 360 + 16,400 = 16,851

Multiplying both sides by 360:

16,400 x Rate x 180 + 5,904,000 = 6,066,360

16,400 x Rate x 180 = 162,360

Rate = 162,360 / (16,400 x 180)

Rate = 0.055 or 5.5%

Therefore, the interest rate of the loan is 5.5%.