Anyone know this?

  • Thread starter wmosley
  • Start date
  • #1
12
0
Trying to come up with an Equation?

7. John borrowed $1,000.00 discounted at 10% for six months.

7a. How much did he receive when the loan was made?

7b. What annual rate of interest is he paying for the money actually received?
 
Last edited:

Answers and Replies

  • #2
HallsofIvy
Science Advisor
Homework Helper
41,847
966
"$1000 discounted at 10% for 6 months"

What that means is that he borrowed A dollars and 6 months later, he had to pay back a total of $1000 to account for both the original loan and the interest at 10% annual interest rate.

If he borrowed A dollars for 6 months= 1/2 year at 10% annual interest rate, then his total interest due would be (1/2)(0.10)A= 0.05A. Adding that to the initial amount, A, he must pay back A+ 0.05A= 1.05A. Since, in fact, he must pay back $1000, we have 1.05A= 1000 so A= 1000/1.05= $952.38. The remaining 1000- 952.38= $47.62 is the interest. He received $952.38 and payed a total interest of $47.62.
 

Related Threads on Anyone know this?

  • Last Post
Replies
4
Views
2K
Replies
12
Views
1K
  • Last Post
Replies
3
Views
2K
Replies
3
Views
6K
Replies
15
Views
2K
Replies
1
Views
1K
Replies
4
Views
2K
Replies
5
Views
3K
  • Last Post
Replies
4
Views
4K
P
Top