Asked by Megan Musialek on Jun 05, 2024
Verified
For a few years now, Karen Williamson and her sister have operated an office services company that caters to small businesses in town. Recently, they got an opportunity to buy a used high-speed copy machine for $8,500, which they considered an excellent price. To make the purchase quickly, they agreed to pay $1,000 now and borrow $7,500 from the seller for 60 days at 9.5% exact simple interest. What is the total amount that they will need to repay the seller at the end of the 60 days? (Use a 365-day year.)
Exact Simple Interest
Interest calculated precisely based on the principal amount, a fixed interest rate, and the number of days between payments.
365-Day Year
A method used in finance that assumes all years have 365 days for the purpose of interest calculation.
High-Speed Copy Machine
An office machine designed for rapid copying of documents and images, capable of producing numerous copies within a short period.
- Become proficient in calculating the precise simple interest for loans, adhering to a 365-day year.
- Calculate the sum total of repayment (principal amount along with interest) for short-duration loans.
Verified Answer
ZK
Zybrea KnightJun 07, 2024
Final Answer :
$7,500 × 0.095 × 60/365 = $117.12; $7,500 + $117.12 = $7,617.12
Learning Objectives
- Become proficient in calculating the precise simple interest for loans, adhering to a 365-day year.
- Calculate the sum total of repayment (principal amount along with interest) for short-duration loans.