Question

The maturity value of a 50-day loan of $550 is $560. What is the annual simple interest rate (in percent) on this loan? Round to the nearest tenth of a percent. Use 360 days in 1 year.

Answer 1

Answer:

13.1%

Step-by-step explanation:

Principal value of the loan = $550

Maturity Value of the loan = $560

Let the rate of simple interest = R

Time = 50 days = $\[\frac{50}{360}\]$ years

Simple Interest = Maturity Value - Principal Value = $560 - $550 = $10

But Simple Interest = $\[\frac{Principal * R * Time}{100}\]$

Substituting, $\[10 = \frac{550 * R * 50/360}{100}\]$

$\[=> R = \frac{10*100*360}{550*50}\]$

$\[=> R = 13.1%\]$