Janet took out a loan of $50,000 from Bank of America at 8 percent on March 19, 2006 which is due on July 8, 2006. Using exact interest, the amount of Janet's interest cost is
4,000
That would be the interest for the whole year, so it is incorrect
see ....
http://www.jiskha.com/display.cgi?id=1340199302
1216.44
To calculate the amount of interest cost on the loan, we need to determine the number of days between March 19, 2006, and July 8, 2006.
Step 1: Determine the number of days in March 2006 after March 19th.
- March 2006 has 31 days, and Janet took the loan on March 19th, so there are 12 days left in March.
Step 2: Determine the number of days in April, May, June, and up to July 8th.
- April has 30 days.
- May has 31 days.
- June has 30 days.
- From July 1st to July 8th, there are 8 days.
Step 3: Sum up the number of days.
- 12 days in March + 30 days in April + 31 days in May + 30 days in June + 8 days in July = 111 days.
Step 4: Calculate the interest cost.
- The interest rate is 8 percent, which is expressed as 0.08 in decimal form.
- To calculate the interest cost, we multiply the loan amount ($50,000) by the interest rate (0.08) and the number of days (111) divided by 365 (assuming a 365-day year).
- Interest cost = $50,000 * 0.08 * (111/365)
Thus, the amount of Janet's interest cost on the loan would be $4,000.