Oakwood Plowing company purchased two new plows. In 170 days they must make a payment of $24,330.00 to pay for them. As of today they have $23,600 what rate of interest will be needed.
To find the rate of interest needed, we can use the formula for simple interest:
Simple Interest = Principal * Rate * Time
In this case, the principal is the amount they need to pay ($24,330.00), the time is 170 days, and the interest is unknown. We need to find the rate.
Rearranging the formula, we have:
Rate = Simple Interest / (Principal * Time)
First, we need to calculate the simple interest.
Simple Interest = Amount to be Paid - Current Amount
Amount to be Paid = $24,330.00
Current Amount = $23,600
Simple Interest = 24,330 - 23,600
Next, plug in the values into the formula for rate:
Rate = (Simple Interest) / (Principal * Time)
Rate = (24,330 - 23,600) / (24,330 * 170)
Now, we can calculate the rate:
Rate = (730) / (4,134,100)
Rate ≈ 0.0001764
So, the rate of interest needed is approximately 0.01764 (or 1.764%).