Mike Drago took out a loan for $3,800 at the Gold Coast Bank for 280 days. If the bank uses the ordinary interest method, what rate of interest was charged if the amount of interest was $278? Round your answer to the nearest tenth of a percent.
well, the amount of interest per day was 278/280
So, the percent interest per day was (278/280)/3800 = .0002613 = 0.02613%
Now multiply that by how many days in a year ...
To find the rate of interest, we can use the formula for ordinary interest:
Interest = Principal * Rate * Time
Given:
Principal (P) = $3,800
Time (T) = 280 days
Interest (I) = $278
Substituting the given values into the formula, we have:
$278 = $3,800 * Rate * 280
To solve for the rate, we can rearrange the formula:
Rate = Interest / (Principal * Time)
Rate = $278 / ($3,800 * 280)
Calculating the rate:
Rate = 0.000209 / 0.000532
Rate ≈ 0.393
Therefore, the interest rate charged is approximately 39.3%.
To find the rate of interest charged, we can use the formula for ordinary interest:
Interest = Principal * Rate * Time
In this case, the principal amount is $3,800 and the time is 280 days. We are given that the interest amount is $278. Rearranging the formula, we get:
Rate = Interest / (Principal * Time)
Plugging in the given values:
Rate = $278 / ($3,800 * 280)
Calculating this expression will give us the rate of interest charged.