Carol Miller went to Europe and forgot to pay her 740 mortgage payment on her New Hampshire ski house. For her 59 days overdue on her payment, the bank charged her a penality of 15 dollars. What was the rate of intrest charged by the bank? Round to the nearest hundredth percent (assume 360 days).
To calculate the interest rate charged by the bank, we first need to determine the effective interest rate per day. We can use the formula:
Interest = Principal x Rate x Time
Let's break down the given information:
Principal (P) = $740
Penalty (Interest) = $15
Time (T) = 59 days
365 days = 1 year (approximating to a 360-day year as mentioned)
We need to find the rate (R).
Using the formula, we can rearrange it to solve for the rate:
Rate = Interest / (Principal x Time)
First, calculate the daily interest rate:
Daily Interest Rate = $15 / ($740 x 59)
Next, convert the daily interest rate to an annual interest rate:
Annual Interest Rate = Daily Interest Rate x (360 / 1)
Finally, round the annual interest rate to the nearest hundredth percent.
Let's calculate:
Daily Interest Rate = $15 / ($740 x 59)
Daily Interest Rate = $0.00035 (rounded to the nearest cent)
Annual Interest Rate = $0.00035 x (360 / 1)
Annual Interest Rate = 0.126 (rounded to the nearest hundredth percent)
Therefore, the bank charged Carol a 0.13% interest rate for being 59 days overdue on her payment.
Note: If you need to calculate the interest rate with exact precision, please use the exact decimal values throughout the calculation.