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Work the following interest problem.


Loan Amount: $13,000

Method of payment: discount basis

Amount of Interest: $625

Term of loan: 1 year


Effective Rate of Interest (to the nearest tenth) = ______

Verified Answer :

Aliwohaish12

R=i/pt
R=625÷13,000
R=0.048*100=4.8%

The Rate of Interest (R) is 5.05%

What is simple interest?

"The method of calculating the interest amount for a particular principal amount of money at some rate of interest."

Formula to calculate the simple interest:

SI = (P × R × T)/100

where  

P = Principal,

R = Rate of Interest,

T = Time period.

Formula for an amount:

A = P + I,

where P is the Principal and I is the amount of interest

Formula to calculate rate of interest:

R = (I × 100)/ PT

For given problem,

A = $13000

I = $625

T = 1

We find the principal using the formula of amount.

⇒ A = P + I

⇒ 13000 = P + 625

⇒ P = 13000 - 625

⇒ P = $12375

Using the formula to calculate the rate of interest,

⇒ R = (I × 100)/ PT

⇒ R = (625 × 100)/ (12375 × 1)

⇒ R = 5.05%

Therefore, the Rate of Interest (R) is 5.05%

Learn more about Rate of Interest here:

https://brainly.com/question/23448806

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