Question

A loan of $1,090 was repaid at the end of 12 months with a check for $1,105. What annual rate of interest was charged?

Answer 1

Answer: 1.38%

Explanation:

A loan of $1,090 was repaid at the end of 12 months with a check for $1,105. From the question, the principal is $1090 ,time is 12 months. Interest is (1105 - 1090) = $15. To calculate the rate goes this:

Formuale is below:

Rate= (Final/initial) - 1

=(1105/1090)-1

= 1.0138 - 1

= 0.0138

= 1.38%

The annual rate of interest is 1.38%