Answer:
The rate of the loan is 2.32% monthly or 27.84% annually.
Step-by-step explanation:
Let's recall the formula of the Simple interest:
A = P * (1 + rt)
Where:
A = Total Loan (money received + interest)
P = Initial loan
r = Rate of Interest
t = Time Period involved in months
A = 54.50 * 45 = $ 2,452.50
Replacing with the real values, we have:
A = P * (1 + rt)
2,452.50 = 1,200 * (1 + 45r)
2,452.50 = 1,200 + 54,000r
54,000r = 2,452.50 - 1,200
54,000r = 1,252.50
r = 1,252.50/54,000
r = 0.0232 = 2.32%
The rate of the loan is 2.32% monthly or 27.84% annually.
