Question

Eight 180 de 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 bankers message which uses 360 days in a year

Answer 1

5.5%

Explanation:

You want the interest rate on a 180-day simple interest loan of 16,400 if the amount repaid is 16,851.

Amount paid

The amount repaid will be ...

A = P(1 +rt)

where P is the principal, r is the annual rate, and t is the number of years.

Using the given values, we have ...

16851 = 16400(1 +r(180/360))

16851/16400 = 1 +r/2 . . . . . . . . . divide by 16400

16851/16400 -1 = r/2 = 0.0275

r = 2(0.0275) = 0.055 = 5.5%

The interest rate of the loan is 5.5%.

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