Oakwood plowing company purchased two new plows for the upcoming winter. Oakwood must make a single payment of 25,03 to pay for the plows. As of today he has $24,200. Asuume the Oakwood puts the money in the bank today, what rate of interest will it need to pay off the plows in 200 days?
To find the interest rate required to pay off the plows in 200 days, we need to use the formula for calculating interest:
Interest = Principal * Rate * Time
In this case, the principal is the amount of money Oakwood has in the bank ($24,200), and the time is 200 days. We need to solve for the rate (interest rate). Rearranging the formula, we have:
Rate = Interest / (Principal * Time)
Since we know the interest is the difference between the payment amount ($25,003) and the principal, we can calculate it:
Interest = Payment amount - Principal
= $25,003 - $24,200
= $803
Now, we can substitute the values into the formula:
Rate = $803 / ($24,200 * 200)
Simplifying the calculation:
Rate = 0.00167355
Now, we need to convert this decimal into a percentage:
Rate = 0.00167355 * 100
= 0.167355%
Therefore, Oakwood will need to find a bank or lender that offers an interest rate of approximately 0.167355% to pay off the plows in 200 days.