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12 January, 12:32

What is the rate of interest on a loan of $2,000, for 284 days, if the amount of interest is $93.37, using the exact interest method? (round your answer to the nearest tenth percent) ?

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  1. 12 January, 12:36
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    Exact interest method is using 365 days instead of 360.

    We are going to use the formula: I = Prt, we will derived the formula of rate.

    r = I / Pt would be our formula, plugging in our amounts.

    r = 93.37 / 2000 / (284/365)

    = 93.37 / 2000 (0.7781)

    = 93.37 / 1556.1643

    = 0.06 or 6% when converted to percent.

    To check:

    I = Prt

    = 2000 x 0.06 x 284/365

    = 120 x 0.7781

    = 93.37
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