Ask Question
3 November, 17:52

Billie took out a $1,200 discounted loan for a period of 3 months. The amount she actually received into her bank account was $1,150. What is the (simple) interest rate for this loan? Give your answer as a percentage to the nearest percent.

+1
Answers (1)
  1. 3 November, 19:36
    0
    The annual interest rate for this loan is 16.67% or 1.38% per month.

    Step-by-step explanation:

    Let's evaluate the information given:

    Amount of the loan = US$ 1,200

    Duration of the loan = 3 months

    Net amount received by Billie into her bank account = US$ 1,150

    Interests for the loan = Amount of the loan - Net amount received into bank account

    Interests for the loan = 1,200 - 1,150

    Interests for the loan = US$ 50

    Now for calculating the interest rate, we do this operation:

    Interest rate = Interests for the loan / Amount of the loan

    Interest rate = 50/1200 = 1/24 = 0.0417 * 100 = 4.17%

    But let's remember that this is for the total duration of the loan, 3 months. For calculating the annual interest rate, we do the following operation:

    Annual interest rate = Loan interest rate/3 * 12 (We use 12 because the year has 12 months)

    Annual interest rate = (1/24) / 3 * 12

    Annual interest rate = (1/24) * 1/3 * 12 = 1/72 * 12 = 12/72 = 1/6 = 0.1667 * 100 = 16.67% (Rounding to two decimals)

    The annual interest rate advertised by the bank is 16.67% or 1.38% per month.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Billie took out a $1,200 discounted loan for a period of 3 months. The amount she actually received into her bank account was $1,150. What ...” in 📙 Mathematics if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers