Final answer:
The total amount you will receive from the finance company using the discount method of calculating interest on a loan principal of $4,500 at a 4.5% interest rate over 1.5 years would be $4,196.25. The interest of $303.75 is calculated and deducted upfront from the principal.
Step-by-step explanation:
The question requires a calculation of the amount you will receive using the discount method of calculating interest. To find out the total interest using the discount method, we use the formula Interest = Principal × rate × time. Given a principal of $4,500, an interest rate of 4.5%, and a time frame of 1.5 years, the calculation would be as follows:
Interest = $4,500 × 0.045 × 1.5
This would result in an interest amount of $303.75. Therefore, with the discount method, the finance company would deduct this interest upfront, and the amount you will receive would be the principal minus the interest calculated, which is $4,500 - $303.75 = $4,196.25.
Let's also look at a similar example with a different scenario:
If <$500> in simple interest is received on a loan of $10,000 for five years, the formula to find the interest rate is:
$500 = $10,000 × rate × 5 years
Simplifying further:
$500 = $50,000 × rate
$500/$50,000 = rate
Rate = 1%