On May 23, Samantha Best borrowed $40,000 from the Tri City Credit Union at 13% for 160 days. The credit union uses the exact interest method. What was the amount of interest on the loan?
$40,000 x 13% x 160 /365 = $2,279.45 the amount of interest on the loan?
On May 23, Samantha Best borrowed $40,000 from the Tri City Credit Union at 13% for 160 days. The credit union uses the exact interest method. What was the amount of interest on the loan? Using the scenario from the previous question, calculate the maturity value of the loan
To calculate the amount of interest on the loan, you need to use the formula:
Interest = Principal * Rate * Time
Here's how you can use this formula to find the amount of interest on Samantha's loan:
Step 1: Convert the interest rate to a decimal. The interest rate is given as 13%. To convert it to a decimal, divide it by 100: 13/100 = 0.13
Step 2: Calculate the interest using the formula.
Principal = $40,000
Rate = 0.13 (as calculated in step 1)
Time = 160 days (given in the question)
Interest = $40,000 * 0.13 * (160/365)
Step 3: Simplify the equation.
Interest = $40,000 * 0.13 * 0.438
Step 4: Calculate the final amount.
Interest = $2,852
Therefore, the amount of interest on Samantha's loan is $2,852.