9514 1404 393
Answer:
a) interest: $215.33
b) proceeds: $3584.67
c) effective rate: 9.01%
Step-by-step explanation:
a) The problem statement tells you the loan was discounted 8.5%. The amount of interest paid is ...
I = Prt
I = $3800·0.085·8/12 ≈ $215.33
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b) The proceeds of the loan are ...
$3800 -215.33 = $3584.67
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c) The actual rate is found using the same formula as above, solving for r:
r = I/(Pt) = $215.33/($3584.67·2/3) ≈ 0.0901 = 9.01%
