Question

(Round your response to the nearest If a lender makes a simple loan of $800 for 5 years and charges 5%, then the amount that the lender receive at maturity is $ two decimal place) If a lender makes a simple loan of $2500 for one year and charges $70 interest, then the simple interest rate on that loan is % (Round your response to the nearest whole number) If a borrower must repay $106.50 one year from today in order to receive a simple loan of $100 today, the simple interest on this loan is O A. 6.5% B. 6.0% OC. 65% OD 5.0%

Answer 1

Explanation:

Here we use the formula for simple interest as

Simple interest =
`(PNR)/(100)`

P stands for principal, N = no of years and r = rate of interest.

i)Here
`P = 800: n=5 \\ r= 5 p.c\\SI =(800(5)(5))/(100) =200` dollars

ii) Here
`P = 2500: n=1 and r= ?: Si = 70`

`(2500(1)(r))/(100) =70\\r=(70)/(25) =2.8` percent

iii)
`P = 100: n=1 and r= ?: \\P+Si = 106.50\\Interest = 106.50-100\\=6.50`

Thus simple interest = 6.50

`(100(1)(r))/(100) =6.50\\r = 6.5`

Option A is right