0.024 /yr
Step-by-step explanation:
Without interest, the monthly repayment would be;
5 yrs = 12 months * 5 = 60 months
$4200 / 60
= $70
James, however, pays $78.40 monthly. The interest therefore is;
Jmaes pays a total of $78 * 60 = $4704 at the end of the 5 years. The formula for finding simple interest is;
A = P(1 + rt)
Where:
A = Total Accrued Amount (principal + interest)
P = Principal Amount
I = Interest Amount
r = Rate of Interest per year in decimal; r = R/100
R = Rate of Interest per year as a percent; R = r * 100
t = Time Period involved in months or years
4704 = 4200 (1 + 5r )
4704 = 4200 + 21000r
504 = 21000r
r = 504/21000
r = 0.024
Interest rate = 0.024 /yr
Learn More:
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