Question

what is the rate of interest (as a %) on a loan of $7,000, for 236 days, if the amount of interest is $327.39, using the ordinary interest method? round to the nearest tenth of percent

Explanation:

Step1: Recall ordinary interest formula

The ordinary interest formula is $I = P \times r \times \frac{t}{360}$, where $I$ is interest, $P$ is principal, $r$ is annual interest rate, $t$ is time in days. Rearrange to solve for $r$:
$$r = \frac{I \times 360}{P \times t}$$

Step2: Plug in given values

Substitute $I=\$327.39$, $P=\$7000$, $t=236$:
$$r = \frac{327.39 \times 360}{7000 \times 236}$$

Step3: Calculate numerator and denominator

First compute numerator: $327.39 \times 360 = 117860.4$
Denominator: $7000 \times 236 = 1652000$

Step4: Compute rate and convert to %

$$r = \frac{117860.4}{1652000} \approx 0.0713$$
Convert to percentage: $0.0713 \times 100 = 7.13\%$, round to nearest tenth: $7.1\%$

Answer:

7.1%