She paid the loan at a 15% rate of interest.
Given that Lindsay borrowed $ 120,000 in a bank for a year, if she paid $ 139,290.54 on the maturity date, to determine at what rate of interest, compounded monthly, did she pay, the following calculation must be performed:
- 120,000 x (1 + X / 12) ^ 12 = 139,290.54
- (1 + X / 12) ^ 12 = 139,290.54 / 120,000
- 1 + X / 12 = 12√1.1607545
- X / 12 = 1,012 - 1
- X = 15
Therefore, she paid the loan at a 15% rate of interest.
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