SOLUTION: Jason borrowed $3100 from the bank for 22 months. The bank discounted the loan at 7.8%. How much was the interest? $ State your result to the nearest penny. How much did J

Algebra ->  Customizable Word Problem Solvers  -> Finance -> SOLUTION: Jason borrowed $3100 from the bank for 22 months. The bank discounted the loan at 7.8%. How much was the interest? $ State your result to the nearest penny. How much did J      Log On

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Question 1193473: Jason borrowed $3100 from the bank for 22 months. The bank discounted the loan at 7.8%.
How much was the interest?
$
State your result to the nearest penny.
How much did Jason receive from the bank?
$
State your result to the nearest penny.
What was the actual rate of interest?
% State your result to the nearest hundredth of a percent
Answer by yurtman(42) About Me  (Show Source):
You can put this solution on YOUR website!
**1. Calculate the Interest**
* **Discount Period:** 22 months
* **Discount:** $3100 * 0.078 * (22/12) = $445.10
**2. Calculate the Amount Received**
* **Amount Received:** $3100 - $445.10 = $2654.90
**3. Calculate the Actual Rate of Interest**
* **True Amount Borrowed:** $2654.90
* **Interest Paid:** $445.10
* **Time in Years:** 22 months / 12 months/year = 1.83 years
* **Actual Interest Rate:** (Interest Paid / True Amount Borrowed) / Time
* Actual Interest Rate = ($445.10 / $2654.90) / 1.83
* Actual Interest Rate = 0.0891
* **Actual Interest Rate (Percentage):** 0.0891 * 100 = 8.91%
**Therefore:**
* **Interest:** $445.10
* **Amount Received:** $2654.90
* **Actual Rate of Interest:** 8.91%