Question

Your bank will lend you ( $ 8,000 ) for 45 days at a cost of $ 98 interest. a. What is your annual rate of interest? (Use 365 days in a year. Do not round intermediate caiculations.?

Answer 1

Using the simple interest formula, the annual rate of interest on the loan is found to be about 9.93%.

Step-by-step explanation:

To determine the annual rate of interest on a loan, you can use the formula for simple interest, which is Interest = Principal × rate × time. In this case, the interest is $98, the principal is $8,000, and the time is 45 days out of a 365-day year.

The formula can be rearranged to solve for the rate:

rate = Interest / (Principal × time)

Substituting in the given values:

rate = $98 / ($8,000 × (45/365))

rate = $98 / $986.301

Now, calculating the rate:

rate = 0.0993 (or 9.93% approximately)

The annual rate of interest for this loan is therefore about 9.93%.