Janet Home went to Citizens Bank. She borrowed $7,000 at a rate of 8 percent. The date of the loan was Sept 20. Janet hoped to repay the loan on Jan.20. Assuming the loan is based on ordinary interest, Janet will pay back interest on Jan.20 is?
I = PRT
I = 7,000 * 0.08 * 0.333
A. $188.22
B. $187.18
C. $187.17
D. $189.78
Ms.sue so which one is the answer I don't get it
The formula for this is I = PRT
I = Interest
P = Principal (starting amount) = $7,000
R = Rate (percentage) = 8% = .08
T = Time in years = days/years = 122/365
I = 7000(.08)(122/365)
I = $187.178
I = $187.18 (rounded)
B. $187.18
Ps: When the time is less than a year you have to convert it like I did above.
To calculate the interest that Janet will pay back on Jan. 20, we need to determine the length of time she will have the loan and the interest rate.
The first step is to calculate the time period between the loan start date (Sept. 20) and the loan repayment date (Jan. 20). We can do this by counting the number of months.
The loan start date is in September, while the repayment date is in January of the following year. So, the time period is 4 months.
Next, we need to calculate the interest amount from the loan.
To find the interest, we multiply the loan amount ($7,000) by the interest rate (8%) and then multiply that by the time period in years.
Step 1: Convert the months to years: 4 months ÷ 12 months/year = 0.33 years.
Step 2: Calculate the interest: $7,000 x 8% x 0.33 = $184.
Therefore, Janet will pay back $184 in interest on Jan. 20.