Question

Philippa took out a $860 discounted loan for a period of m months at a simple interest rate of 6%. The amount she actually received into her bank account was $838.50. Calculate the value of m.

Answer 1

5 Months

Explanation:

For this calculation we use the fact that the total interest is $860 − $838.50 = $21.50. Therefore using I = Prt,

we get $21.50 = $860 × 0.06 × t.

Solving this for t gives t = 0.416 =512. Hence m = 5.