Use the ordinary interest method to find the rate of interest that Valley Mountain Vineyards pays on a loan of $5,500 for 234 days, if the amount of interest is $345.67. (Round to nearest tenth percent)
A) 8.3%
B) 10.2%
C) 14.5%
D) 9.7%

Question

Quizplus · Accepted Answer

The ordinary interest method uses a 360-day year. The formula is Interest = Principal x Rate x Time. Solving for Rate: Rate = Interest / (Principal x Time). Substituting the given values: Rate = $345.67 / ($5,500 x 234/360) = 0.097, which is 9.7% when rounded to the nearest tenth percent.

Use the Ordinary Interest Method to Find the Rate of Interest