SOLUTION: The simple discount rate of a bank is 16% per annum. If a client signs a note to pay R6000 in nine months time: 1.1. How much will the client receive? 1.2. What is the equivalent

Question 1194407: The simple discount rate of a bank is 16% per annum. If a client signs a note to pay R6000 in nine months time:
1.1. How much will the client receive?
1.2. What is the equivalent simple interest of this loan?
Answer by Theo(13342) (Show Source): You can put this solution on YOUR website!
simple interest formula is i = p * r * t
i is the interest, p is the principal, r is the interest rate per time period, t is the number of time periods.
6000 payable in 9 months at 16% per year make the formula:
i = 6000 * .16 * 9/12 = 720.
the client will receive 6000 minus 720 = 5280.
the equivalent simple interest of the loan is 720 / 5280 = .1363636364.
that's 13.64% rounded to two decimal places after converting the rate to percent.
the rate * 100 = percent.

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