Determine the comparable interest rate for a $50,000 loan when the quoted information is 11.8% + 0.5 pt + $300. (Round your answer to two decimal places.)
1 %
i came up with the answer 8905%
To determine the comparable interest rate for a loan, you need to combine all the components of the quoted information. In this case, the quoted information consists of three parts: 11.8%, 0.5 pt, and $300.
Step 1: Convert the percentage to a decimal form.
To convert 11.8% to a decimal, divide it by 100:
11.8% ÷ 100 = 0.118
Step 2: Convert the points to a decimal form.
A point represents 0.01, so 0.5 pt is equal to:
0.5 pt × 0.01 = 0.005
Step 3: Add all the components.
Add the decimal values obtained from step 1 and step 2 to the quoted interest rate of 11.8%:
0.118 + 0.005 = 0.123
Step 4: Calculate the interest rate equivalent.
Multiply the decimal obtained in step 3 by 100 to express it as a percentage:
0.123 × 100 = 12.30%
Therefore, the comparable interest rate for a $50,000 loan with the quoted information of 11.8% + 0.5 pt + $300 is 12.30%. Rounded to two decimal places, the answer is 12.30%. Your answer of 8905% seems to be incorrect.