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?
<pre>
If the purchaser had paid when he first got the bike, he
would have paid $50-0.05×$50 = $50-$2.50 = $47.50.

So it is the same as if he had borrowed $47.50 for 60 days 
and paid $2.50 interest.

So the principal is $47.50, the interest is $2.50, and
the time is 60/365 = 0.1643835616 of a year. So we solve

I = Prt

for the rate r

{{{r=I/(Pt)}}}

and substitute I = 2.50, P = 47.50, and t=0.1643835616  

{{{r=2.50/((47.50)(0.1643835616))}}}

{{{r=2.50/7.808219178}}}

{{{r=0.3201754386}}}

About 32% per annum interest.

Notice that I used 365 days per year instead of 360.
However the answer still rounds to 32% interest even if 
we use 360 days per year instead of 365.

Edwin</pre>