Question

The following loan is discounted. Fine (a) the discount, (b) The amount of money received and(c) the true interest rate

Answer 1

Step-by-step explanation

Given

`\begin{gathered} P=\text{ \$1590} \\ r=7(1)/(2)\text{\%} \\ t=3\text{ years} \end{gathered}`

a) The discounted load can be gotten with the formula below;

`\begin{gathered} I=PRT \\ I=1590*(7.5)/(100)*3 \\ I=357.75 \end{gathered}`

Answer: $357.75

b) The amount received is

`Net\text{ amount = P-I=1590 -357.75=1232.25}`

Answer: 1232.25

c) The true interest rate is

`\begin{gathered} I=PRT \\ 357.75=1232.25* R*3 \\ 357.75=3696.75R \\ switch\text{ sides} \\ 3696.75R=357.75 \\ R=(357.75)/(3696.75)=0.09677=9.68\text{\%} \end{gathered}`

Answer: 9.68%