Question

Lindsay borrowed ₱120,000 in a bank for a year. If she paid ₱139,290.54 on the maturity date, at what rate of interest, compounded monthly, did she pay?

Answer 1

She paid the loan at a 15% rate of interest.

Given that Lindsay borrowed $ 120,000 in a bank for a year, if she paid $ 139,290.54 on the maturity date, to determine at what rate of interest, compounded monthly, did she pay, the following calculation must be performed:

• 120,000 x (1 + X / 12) ^ 12 = 139,290.54
• (1 + X / 12) ^ 12 = 139,290.54 / 120,000
• 1 + X / 12 = 12√1.1607545
• X / 12 = 1,012 - 1
• X = 15

Therefore, she paid the loan at a 15% rate of interest.

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