Theory question 101
Commercial Arithmetic(a) Mr Sarto borrowed $25,000 from Afiak Financial Services at 21% simple interest per annum for 3 years. If he was able to pay back the loan in 2 years at equal yearly instalments, how much did he pay each year?
(b) Two consecutive numbers are such that the sum of thrice the smaller and twice the larger is 17. Find, correct to three significant figures, the smaller number as a percentage of the sum of the two numbers.
Show the model answer
Model answer
(a) Interest = 25,000 × 21 × 3/100 = $15,750
Total to repay = $40,750
Each year = 40,750 ÷ 2 = $20,375
(b) Let the numbers be n and n + 1: 3n + 2(n + 1) = 17 → 5n = 15 → n = 3
Numbers 3 and 4, sum 7
Percentage = 3/7 × 100 ≈ 42.9%
Explanation
Work out the full amount owed for 3 years first, then split it into 2 payments.