Question

I dont quite understand, nor do I understand how calculate the interest rate

Answer 1

We have a compounded monthly interest, the formula for compounded interest is

`A=P\mleft(1+(i)/(n)\mright)^(nt)`

The tricky part is the "n", when it's compounded monthly we must do n = 12.

The other variables are

t - time

i - rate per year

P - principal

A - accrued amount

Looking at the problem we can identify that

t = 3 years

i = 0.0525 per year

P = ?

A = $3350

Then, if we put it at the formula we get

`\begin{gathered} A=P\mleft(1+(i)/(n)\mright)^(nt) \\ \\ 3350=P\mleft(1+(0.0525)/(12)\mright)^(12\cdot3) \\ \\ 3350=P(1.004375)^(36) \\ \\ 3350=P\cdot1.17017 \\ \\ P=(3350)/(1.17017) \\ \\ P=\$2862.81 \end{gathered}`

Jason borrowed $2862.81