SOLUTION: Sophie borrowed $2000 and took 3 years to repay the loan and $900 interest.
a)What was the per annum simple interest rate?
b) If Sophie’s interest was calculated at the same rat
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-> SOLUTION: Sophie borrowed $2000 and took 3 years to repay the loan and $900 interest.
a)What was the per annum simple interest rate?
b) If Sophie’s interest was calculated at the same rat
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Question 1118564: Sophie borrowed $2000 and took 3 years to repay the loan and $900 interest.
a)What was the per annum simple interest rate?
b) If Sophie’s interest was calculated at the same rate on the balance owing, how much would she have owed after 6 months if she repaid $40 per month? Give your answer to the nearest dollar. Answer by Theo(13342) (Show Source):
i is the interest
p is the principal
r is the interest rate per time period
n is the number of time periods.
in your problem:
i = 900
p = 2000
r = what you want to find
n = 3 years
formula becomes 900 = 2000 * r * 3
solve for r to get r = 900 / 2000 / 3 = .15
that's .15 interest rate per year = 15% per year.
at a nominal interest rate of .15 per year, the interest rate per month would be .15/12 = .0125 per month.
the remaining balance at the end of 6 month is equal to 1907.140183
the following picture of my excel spreadsheet shows the calculations.
the calculations are done in the following manner.
at the end of month 0, she owes 2000.
at the end of month 1, interest on the remaining balance at the end of month 0 is 2000 * .0125 = 25 and payment is 40 dollars.
at the end of month 1, she owes 2000 + 25 - 40 = 1985.
at the end of month 2, the interest on the remaining balance at the end of month 1 is 1985 * .0125 = 24.8125 and payment is 40 dollars.
at the end of month 2, she owes 1985 + 24.8125 - 40 = 1969.5125.
the same procedure continues until the loan is paid off.
this will occur between the end of month 78 and the end of month 79.
this can be seen in the following picture of my excel spreadsheet.
