Question

l. You loan from a bank the amount of P 100,000 with a rate of simple interest of 20% but the interest was deducted from the loan at the time the money was borrowed. If at the end of 1 year you have to pay the full amount of P 100 000 what is the actual rate of interest?

Answer 1

Answer:

Simple interest on $100,000$=$ $100,000 $\times$ 20%$=$ $20,000

Loan received at beginning of year$=$ $100,000$-$ $20,000 $=$ $80,000

Actual interest rate (%) $=$ [$(100,000$-$ 80,000)$/$ $80,000] $\times$ 100

$=$ ($20,000$/$ $80,000) $\times$ 100

$=$ 25$$%