The company needs to borrow 1100000 for 90 days. The interest rate for such loans at your bank Rimrock bank is 14% using ordinary interest.If south side national wants to compete with Rimrock last offer by charging 1125 less interest. What rate (as a %) rounded to the nearest hunderedths or a percent must it quote using exact interest

Question

The company needs to borrow 1100000 for 90 days. The interest rate for such loans at your bank Rimrock bank is 14% using ordinary interest.If south side national wants to compete with Rimrock last offer by charging 1125 less interest. What rate (as a %) rounded to the nearest hunderedths or a percent must it quote using exact interest

Answer 1

First, we need to calculate the interest amount charged by Rimrock bank using the ordinary interest formula:

Interest = Principal x Rate x Time
= 1100000 x 0.14 x (90/360)
= 1100000 x 0.14 x 0.25
= 38500

Now, we need to find the rate that South Side National must quote in order to charge $1125 less interest:

Interest = Principal x Rate x Time
38500 - 1125 = 1100000 x Rate x 0.25
37375 = 275000 x Rate
Rate = 37375 / 275000
Rate = 0.1361

Therefore, South Side National must quote a rate of 13.61% rounded to two decimal places in order to charge $1125 less interest compared to Rimrock bank.