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).
You haven't given enough information to solve this problem. The penalty charged by the bank for a late payment doesn't have anything to do with the rate of interest.
This is what the problem says and that is all the information i have from the book
I suggest you ask your teacher to clarify the problem. A penalty has nothing to do with the interest rate. Banks, though, often charge an additional penalty for late payments.
FEDERICO TAN
To find the rate of interest charged by the bank, we need to determine the annual interest rate (APR).
First, let's calculate the daily interest rate. Divide the $15 penalty by the number of days overdue:
$15 / 59 days = $0.25423728814
Next, we need to calculate the annual interest rate using the formula:
Interest Rate = (Daily Interest Rate * 360) / Loan Amount
We are given the loan amount ($740) and the daily interest rate ($0.25423728814), so we can calculate the annual interest rate:
Interest Rate = ($0.25423728814 * 360) / $740
Now we can solve for the interest rate:
Interest Rate = 0.1236
To convert this decimal to a percentage, we multiply by 100:
Interest Rate = 12.36%
Therefore, the rate of interest charged by the bank is approximately 12.36% (rounded to the nearest hundredth percent).