Velvety Smooth Linens takes out a loan of $3,500, for 314 days. If the amount of interest is $83.29, use the exact interest method to find the rate. (Round to nearest tenth percent)
A) 1.6%
B) 2.9%
C) 2.8%
D) 1.7%

Question

Quizplus · Accepted Answer

The exact interest method uses a year of 365 days to calculate the interest rate. The formula for interest is $I = PRT$, where $I$ is the interest amount, $P$ is the principal amount, $R$ is the rate, and $T$ is the time in years. Rearranging the formula to solve for $R$, we get $R = \frac{I}{PT}$. Substituting the given values, $R = \frac{83.29}{3500 \times (314/365)}$, which calculates to approximately 0.028 or 2.8% when converted to a percentage.

Velvety Smooth Linens Takes Out a Loan of $3,500, for 314