Timmy takes out a loan for $750 for 15 months, but only receives $725 into his bank account. What is the simple interest rate advertised by the bank?

The annual interest rate advertised by the bank is 2.67% or 0.22% per month.

Step-by-step explanation:

Let's evaluate the information given:

Amount of the loan = US$ 750

Duration of the loan = 15 months

Net amount received by Timmy into his bank account = US$ 725

Interests for the loan = Amount of the loan - Net amount received into bank account

Interests for the loan = 750 - 725

Interests for the loan = US$ 25

Now for calculating the interest rate, we do this operation:

Interest rate = Interests for the loan / Amount of the loan

Interest rate = 25/750 = 1/30 = 0.033 * 100 = 3.3%

But let's remember that this is for the total duration of the loan, 15 months. For calculating the annual interest rate, we do the following operation:

Annual interest rate = Loan interest rate/15 * 12 (We use 12 because the year has 12 months)

Annual interest rate = (1/30) / 15 * 12

Annual interest rate = (1/30) * 1/15 * 12 = 1/450 * 12 = 12/450 = 4/150 = 2/75 = 0.0267 * 100 = 2.67% (Rounding to two decimals)

The annual interest rate advertised by the bank is 2.67% or 0.22% per month.