Janet Home went to Citizen Bank. She borrowed $7,000 at a rate of 8 percent. The date of the loan was September 20. Janet hoped to repay the loan on January 20. Assuming the loan is based on ordinary interest, Janet will pay back interest on January 20:
I = PRT
I = 7,000 * 0.08 * 0.3333
The answer is mot $186.
A.$188.22
B.$187.18
C.187.17
D.$189.78
To calculate the interest Janet will pay back on January 20, we first need to determine the time period for which the interest will be accrued.
The loan was taken on September 20 and is hoped to be repaid on January 20. So, we need to calculate the number of days between these two dates.
To do this, we can use the following steps:
1. Calculate the number of days from September 20 to the end of that month (September has 30 days).
September 20 to September 30 = 10 days.
2. Calculate the number of days for the full months that Janet will have the loan.
October = 31 days
November = 30 days
December = 31 days
The total number of days for these three months is 31 + 30 + 31 = 92 days.
3. Calculate the number of days from the beginning of January to January 20.
January 1 to January 20 = 20 days.
4. Add up the days from steps 1, 2, and 3 to get the total number of days Janet will have the loan.
Total = 10 + 92 + 20 = 122 days.
Now that we have the time period, we can calculate the interest Janet will pay back.
The interest formula for ordinary interest is: Interest = Principal * Rate * Time
Principal = $7,000
Rate = 8% (or 0.08 as a decimal)
Time (in years) = 122 days divided by 365 days (since 1 year has 365 days)
Time = 122 / 365 = 0.3342 years (rounded to four decimal places)
Now we can calculate the interest that Janet will pay back on January 20:
Interest = $7,000 * 0.08 * 0.3342
Interest ≈ $186.18
Therefore, Janet will pay back approximately $186.18 in interest on January 20.
(7000)(.08)(122/365) = $187.178
B. $187.18 (after rounding)