If south side national wants to compete with Rimrock last offer by charging 1125 less interest. What rate (as a %) rounded to the nearest hunderedths or a percent must it quote using exact interest

Answer 1

To compete with Rimrock's offer by charging $1125 less in interest, South Side National must lower their interest rate. The interest rate can be calculated using the formula:

Interest = Principal * Rate

Let's assume the principal amount being considered is $10,000 for simplicity. The interest difference between the two offers is $1125.

Rimrock's interest = $10,000 * Rate
South Side National's interest = $10,000 * (Rate - $1125)
Given that South Side National wants to quote the exact interest rate needed to compete with Rimrock and charge $1125 less, we can set the two interest amounts equal to each other:

$10,000 * Rate = $10,000 * (Rate - $1125)
$10,000 * Rate = $10,000 * Rate - $11,250
$11,250 = $10,000 * Rate - $10,000 * Rate
$11,250 = $10,000 * Rate - $10,000 * Rate
$11,250 = $10,000 * Rate - $10,000 * Rate
$11,250 = $10,000 * Rate - $10,000 * Rate

Solving for Rate:

$11,250 = $10,000 * Rate - $10,000 * Rate
$11,250 = $0 * Rate

Therefore, South Side National would not be able to compete with Rimrock by charging $1125 less in interest using exact interest. It would not be possible to quote a rate to the nearest hundredth due to the contradiction in the initial comparison.