document.write( "Question 1042501: a bicycle was purchased for $50 payable in 60 days or at a discount of 5% for cash. If the purchaser pays in 60 days, what is the approximate rate of interest per annum being paid? \n" ); document.write( "

Algebra.Com's Answer #657494 by Edwin McCravy(20065) $\"\"$ $\"About$

You can put this solution on YOUR website!
a bicycle was purchased for $50 payable in 60 days or at a
\n" ); document.write( "discount of 5% for cash. If the purchaser pays in 60 days,
\n" ); document.write( "what is the approximate rate of interest per annum being
\n" ); document.write( "paid?
\n" ); document.write( "

\r\n" );
document.write( "If the purchaser had paid when he first got the bike, he\r\n" );
document.write( "would have paid $50-0.05×$50 = $50-$2.50 = $47.50.\r\n" );
document.write( "\r\n" );
document.write( "So it is the same as if he had borrowed $47.50 for 60 days \r\n" );
document.write( "and paid $2.50 interest.\r\n" );
document.write( "\r\n" );
document.write( "So the principal is $47.50, the interest is $2.50, and\r\n" );
document.write( "the time is 60/365 = 0.1643835616 of a year. So we solve\r\n" );
document.write( "\r\n" );
document.write( "I = Prt\r\n" );
document.write( "\r\n" );
document.write( "for the rate r\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "and substitute I = 2.50, P = 47.50, and t=0.1643835616  \r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "\r\n" );
document.write( "About 32% per annum interest.\r\n" );
document.write( "\r\n" );
document.write( "Notice that I used 365 days per year instead of 360.\r\n" );
document.write( "However the answer still rounds to 32% interest even if \r\n" );
document.write( "we use 360 days per year instead of 365.\r\n" );
document.write( "\r\n" );
document.write( "Edwin

\n" ); document.write( " \n" ); document.write( "

\n" );