Carol Miller went to Europe and forgot to pay her $740 mortgage payment on her New Hampshire ski house. For her 59 days overdue on her payment, the bank charged her a penalty of $15. What was the rate of interest charged by the bank?
I = Po*(r/360)*t = $15
740(r/360)*59 = 15
43,660r/360 = 15
121.28r = 15
r = 0.1237 = 12.37%/yr.
Well, Carol Miller really took "skiing in Europe" to a whole new level! Now she's got to deal with mortgage payments and penalties. Yikes! Anyway, let's crunch the numbers and figure out the rate of interest charged by the bank.
First, we need to calculate the total penalty charged by the bank. Since Carol Miller was 59 days overdue on her payment and the penalty was $15, we divide $15 by 59 to get the penalty per day.
$15 / 59 = $0.25 (approximately)
Now, we can calculate the total interest charged by dividing the penalty by the mortgage payment. So, we divide $0.25 by $740.
$0.25 / $740 ≈ 0.00034 (approximately)
Finally, we multiply this by 100 to get the interest rate as a percentage.
0.00034 * 100 = 0.034% (approximately)
So, it seems like the bank charged Carol Miller a whopping interest rate of 0.034%. Who knew mortgage penalties could be so hilarious? Keep track of those payments, folks!
To find the rate of interest charged by the bank, we need to calculate the interest as a percentage of the mortgage payment.
The penalty charge of $15 is for 59 days overdue. Let's assume that the mortgage payment is due monthly.
To find the daily interest rate, we divide the penalty by the number of days overdue: $15 / 59 = $0.2542 per day.
To calculate the monthly interest rate, we multiply the daily interest rate by the average number of days in a month. Since there are varying numbers of days in different months, let's use an average of 30.44 days per month: $0.2542 * 30.44 = $7.7557 per month.
Now, we need to find the rate of interest as a percentage of the mortgage payment by dividing the monthly interest by the mortgage payment and multiplying by 100: ($7.7557 / $740) * 100 = 1.05%.
Therefore, the rate of interest charged by the bank is approximately 1.05%.
To calculate the rate of interest charged by the bank, we need to use the formula for simple interest. The formula is:
Interest = (Principal * Rate * Time) / 100
In this case, the principal is the amount Carol owed on her mortgage, which is $740. The time is the number of days she was overdue, which is 59 days. The interest charged is $15.
Let's rearrange the formula to solve for the rate:
Rate = (Interest * 100) / (Principal * Time)
Substituting the given values into the formula:
Rate = (15 * 100) / (740 * 59)
Calculating this equation will give us the rate of interest charged by the bank.