Answer to Question #297729 in Financial Math for Fancy

Question

Puleng receives R1500,00 from a bank now, that charges 10.5% simple discount per annum. She has to pay back an amount of R1893.75 in a few months time. The number of months after which Puleng pays back the loan, rounded to one decimal place is

(1) 2.5

(2) 23.8

(3) 2.0

(4) 30.0

Answer 1

Solution:

$P=R\ 1500 \\r=10.5\%=0.105 \\A=R\ 1893.75$

No. of months = t = ?

$A=P+\dfrac{Prt}{12} \\\Rightarrow 1893.75=1500+\dfrac{1500\times0.105\times t}{12} \\\Rightarrow 393.75=\dfrac{1500\times0.105\times t}{12} \\ \Rightarrow t=30$

So, option 4 is correct.