Billy takes out a $2400 discounted loan using a simple interest rate of 8% for a period of 18 months. What is the effective inte

Question

2 years ago

5

rest rate?

2 answers:

Nitella [24] · Answer 1 · 2022-08-19T02:24:20+03:00

7 0

Answer:

Step-by-step explanation:

($2400 x 8)÷100=$192

$192 x 18=$3456

kaheart [24] · Answer 2 · 2022-08-19T04:48:18+03:00

Answer:

9.1

Step-by-step explanation:

To calculate the total interest payable, we use the formula

I=P0rt,

and substituting our values yields

I=$2,400×0.08×1812=$288.

Therefore the total amount he receives at loan drawdown is $2,400−$288=$2,112. To calculate the effective interest rate, we use to formula

A=P0(1+ret).

In this instance we have A=$2,400,P0=$2,112 (redefined from the value above) and t=1.5. We substitute into the formula to get

$2,400=$2,112(1+1.5re).

Solve for re.

24002112=1+1.5re

24002112−1=1.5re

24002112−11.5=re

This gives re=0.0909⋯=9.0909…%, which is 9.1%