Calculating Borrower's Interest Rate on a Loan
If a borrower computed the interest charged for the previous month on his $60,000 loan balance as $412.50, what is the borrower's interest rate?
Based on the fact that borrower was charged $412.50 on his balance of $60,000, the interest rate is 8.25%.
What is the interest rate?
The interest amount is monthly so the yearly amount is:
= 412.50 x 12
= $4,950
The borrower's interest rate is:
= 4,950 / 60,000 x 100%
= 8.25%
In conclusion, the borrower's interest rate is 8.25%.
What is the interest rate? The interest rate is 8.25%.