Explanation Given Information: Face value is $ 15 , 000 , discount rate is 5.20 % , time period is 13 weeks. Formula used: The formula to calculate the time is, Time = Number of weeks of a loan 52 The formula to compute the amount of bank interest is, Bank interest = Face value × Discount Rate × Time The formula to calculate purchase price is, Purchase Price = Face value − Interest The formula to calculate effective rate of interest is, Effective interest rate = Interest Purchase Price × Time Calculation: Consider that face value of loan is $ 15 , 000 , discount rate is 5.20 % and time period is 13 weeks. Compute the interest amount, Simplify the interest rate as, 5.20 % = 5.20 100 = 0.052 Evaluate the time as, Time = Number of weeks of a loan 52 = 13 52 Substitute $ 15 , 000 for face value, 0.052 for discount rate and 13 52 for time in the formula “ Bank interest = Face value × Discount Rate × Time ” as, Bank interest = Face value × Discount Rate × Time = 15 , 000 × 0.052 × 13 52 = $ 195 Hence, amount of interest is $ 195

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Author: Brechner

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Chapter 10.III, Problem 21RE

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To calculate: The amount of bank interest, purchase price and effective rate of interest where face value is $15,000, discount rate is 5.20%, time period is 13 weeks.

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Chapter 10.III, Problem 20RE

Chapter 10.III, Problem 22RE

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Chapter 10 Solutions

EBK CONTEMPORARY MATHEMATICS FOR BUSINE

Ch. 10.I - Find the amount of interest on each of the...Ch. 10.I - Joe Hale goes to a credit union and borrows...Ch. 10.I - Prob. 3TIE Ch. 10.I - Prob. 4TIE Ch. 10.I - a. A loan was made on April 4 and had a due date...Ch. 10.I - a. What is the maturity date of a loan taken out...Ch. 10.I - Prob. 1RE Ch. 10.I - Prob. 2RE Ch. 10.I - Prob. 3RE Ch. 10.I - Prob. 4RE

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The amount of bank interest, purchase price and effective rate of interest where face value is $ 15 , 000 , discount rate is 5.20 % , time period is 13 weeks.

Solution Summary: The author calculates the amount of bank interest, purchase price and effective rate of interest based on face value, discount rate, and time period.

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To calculate: The amount of bank interest, purchase price and effective rate of interest where face value is $15,000, discount rate is 5.20%, time period is 13 weeks.

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Chapter 10 Solutions