Please I just cant figure out how to get the discount, thank you
I have a loan made april 5th, face value 8500 length 90 days, simple interest 8%, discount May 3. what is the discount?I have the answer just cant figure out how to get it
To calculate the discount on a loan, you need to understand the concept of simple interest and the formula for calculating it.
First, let's define some terms.
- Face value: This is the initial amount of the loan, which in this case is $8,500.
- Length: This is the time period of the loan, stated in days. In this case, it is 90 days.
- Simple interest: This is the interest charged on the loan, usually expressed as a percentage. In this case, it is 8%.
- Discount: This refers to the deduction or reduction on the face value of the loan.
To calculate the discount, you'll need to find the amount of simple interest accrued during the period between the loan date (April 5th) and the discount date (May 3rd).
Here's the formula to calculate simple interest:
Interest = (Principal * Rate * Time) / 100
To find the interest, plug in the values:
Principal (P) = Face value = $8,500
Rate (R) = Simple interest rate = 8%
Time (T) = Length of the loan period in years = 90 days / 365 (assuming a standard year)
Interest = ($8,500 * 8% * 90/365) / 100
Simplifying the above expression, you can calculate the interest.
Once you have the value of the interest, you can calculate the discount by multiplying the interest by the face value of the loan.
Discount = Face value * (Interest / 100)
Substituting the values, you can find the discount.
Please note that the calculation assumes simple interest, and there may be other factors or fees involved. If there are any additional fees or compounding interest, the calculation might differ slightly.