Question

1. Cindy Buckley wants to know what rate she is paying on her simple discount note. The maturity valuewas $8,865 with $82.60 interest for 75 days. What was her rate? Round answer to two decimal places.

Answer 1

Recall the simple interest formula

`I=(PRT)/(100)`

From the question

P=$8,865

R=?

The time is given as 75 days

Converting this to years gives

`T=(75)/(365)`

And the interest is

I=$82.60

Substitute these values into the interest formula

`82.60=(8865* R*(75)/(365))/(100)`

Solve for R

`\begin{gathered} 8260=8865* R*(75)/(365) \\ 8,260=R(664875)/(365) \\ 3014900=664875R \\ R=(3014900)/(664875) \\ R=4.53 \end{gathered}`

Therefore the rate is 4.53%