Zoe takes out a discounted loan for $1,200 at a simple interest rate of 6%, but only receives $1,020 into her bank account. What's the duration of the loan?

Question

asked May 10, 2020 136k views

2 Answers

Jose Vasquez · Answer 1 · 2020-05-16T13:48:40+0000

Answer: The duration of the loan is approximately 2.5 years.

Explanation:

Since we have given that

Principal = $1200

Rate of interest = 6%

Interest = $1020

We need to find the duration of the loan.

As we know the formula for "Simple interest":

$I=(P* R* T)/(100)\\\\180=(1200* 6* T)/(100)\\\\180=12* 6T\\\\(180)/(72)=T\\\\T=12.5\ yrs$

Hence, the duration of the loan is approximately 2.5 years.