A loan of RM300 will become RM333.75 after a definite period. If the loan is charged a simple interest of 7.5% per annum, find this definite period using the Banker’s Rule.

Answer 1

To find the definite period using the Banker's Rule, we need to use the formula:

Amount = Principal + (Principal * Interest Rate * Time)

Where:
Amount = RM333.75
Principal = RM300
Interest Rate = 7.5% per annum (0.075)
Time = Definite period (unknown)

Substituting the given values into the formula, we get:

RM333.75 = RM300 + (RM300 * 0.075 * Time)

Simplifying the equation:

RM333.75 - RM300 = RM300 * 0.075 * Time

RM33.75 = RM22.50 * Time

Dividing both sides of the equation by RM22.50:

Time = RM33.75 / RM22.50

Time = 1.5

Therefore, the definite period is 1.5 years or 18 months.