. Compute the rate for the following loan. Round your answer to the nearest tenth of a percent.
Principal
Rate (%)
Time
Interest
$50,000
9 months
$4,500
(Points : 2)
Are we doing simple interest?
notice your data did not line up nicely, do we have
principal = $50000
rate = ????
time = 9 months
interest = $4500 ?
rate = interest/(principal x time)
= 4500/(50000(9/12)) = .12
So the simple interest rate is 12% per annum
To compute the rate for the loan, we need to divide the amount of interest by the principal loan amount and time.
In this case, the principal loan amount is $50,000 and the time is 9 months. The interest amount is $4,500.
To find the rate, we use the formula:
Rate = (Interest / Principal) * (1 / Time)
Plugging in the values:
Rate = ($4,500 / $50,000) * (1 / 9)
Simplifying the expression:
Rate = 0.09 * (1 / 9)
Rate = 0.01
To convert the decimal to a percentage, we multiply by 100:
Rate = 0.01 * 100
Rate = 1%
Therefore, the rate for the loan is 1%, rounded to the nearest tenth of a percent.