Using the exact interest method (365 days), find the amount of interest on the following loan
Principal
Rate (%)
Time (days)
Exact Interest
$1,700
12½ %
33
I = PRT
I = 1,700 * 0.125 * 0.0904
I = 19.21
What is the maturity value of the following loan? Use MV = P(1 + RT) to find the maturity.
Principal
Rate (%)
Time
Maturity Value
$120,740
11¾ %
7 months
To find the amount of interest using the exact interest method, you can use the formula:
Exact Interest = Principal x Rate x Time
Now let's plug in the given values:
Principal = $1,700
Rate = 12½% (which is equivalent to 0.125 in decimal form)
Time = 33 days
Substituting these values into the formula:
Exact Interest = $1,700 x 0.125 x 33
Calculating this expression:
Exact Interest = $7,987.50
Therefore, the amount of interest on the loan is $7,987.50.
To find the amount of interest on the loan using the exact interest method (365 days), you can follow these steps:
1. Convert the interest rate from a percentage to a decimal: 12.5% = 0.125.
2. Calculate the interest for one day by multiplying the principal ($1,700) by the interest rate: $1,700 * 0.125 = $212.50.
3. Multiply the interest for one day by the number of days (33) to get the exact interest: $212.50 * 33 = $7,012.50.
Therefore, the amount of interest on the loan is $7,012.50.