Question #249974

Zelda borrowed R5760,00

 from a bank for 21 months. For the discount loan she only received R4752,00

. Determine: 


    (i)   the yearly discount rate, d


    (ii)   the equivalent yearly simple interest rate, i



Give the answers as percentages and round them to two decimal places.


1
Expert's answer
2021-10-12T13:44:09-0400

In this we have to calculate present value on based on discount rate.


i

Discounted value = Present value=475200

Borrowed amount =576000

Period = 21 months =1.75 years 

r = Annual rate of interest

Present value=Future value(1+r)1.75Present\space value = \frac{Future\space value}{(1+r)^{1.75}}

475200=576000(1+r)1.75475200=\frac{576000}{(1+r)^{1.75}}

(1+r)1.75=1.2121212121(1+r)^{1.75}=1.2121212121

r=11.62%

This is annual rate of interest.


ii

Simple discountrate=Discountborrowed amount×12 monthsLoan periodSimple\space discount rate = \frac{Discount}{ borrowed\space amount }\times\frac{ 12\space months}{ Loan \space period }


Discount =576000-475200=$100800


Simple interest rate =101800576000×1221=10%=\frac{101800}{576000} \times \frac{12}{21}=10\%


Simple interest rate=10%

 


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