Find the length of the loan in months, if $600 is borrowed with an annual simple interest rate of 9% and with $681 repaid at the end of the loan.

Question

Find the length of the loan in months, if $600 is borrowed with an annual simple interest rate of 9% and with $681 repaid at the end of the loan.

Length of the loan = _____________ months.

Answer 1

The annual simple interest rate is 9%, then the monthly simple interest rate will be 9%/12 = 0.75%

The total interest rate charged for this loan is 681/600 - 1 = 1.135 - 1 = 0.135 = 13.5%

So, length of the loan in months = 13.5% / 0.75% = 18 months