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 penalty of $15. What was the rate of interest charged by the bank?
I = Po*(r/360)*d = 15
740*(r/360)*59days = 15
121.3r = 15
r = 0,1237 = 12.37%.
To calculate the rate of interest charged by the bank, you need to divide the penalty amount by the overdue amount, and then convert the result into a percentage.
1. Determine the overdue amount: $740
2. Determine the penalty charge: $15
3. Calculate the rate of interest: (Penalty / Overdue Amount) * 100
Let's calculate it step by step:
Step 1: Determine the overdue amount
The overdue amount is given as $740.
Overdue Amount = $740
Step 2: Determine the penalty charge
The penalty charge is given as $15.
Penalty = $15
Step 3: Calculate the rate of interest
Rate of Interest = (Penalty / Overdue Amount) * 100
Rate of Interest = ($15 / $740) * 100
Rate of Interest = 0.0203 * 100
Rate of Interest = 2.03%
Therefore, the bank charged Carol Miller an interest rate of 2.03%.