Asked by Krista Schmidt on May 07, 2024
Verified
Barbara Evanston, a novelty shop owner, can save $500 by purchasing merchandise now instead of waiting for two months. However, she will have to borrow $3,200 for 60 days and will have to pay 8.5% exact simple interest. How much will Barbara have to pay in interest to borrow the money? (Use a 365-day year.)
Exact Simple Interest
Interest calculated linearly on the principal amount, where the calculation is based precisely on the time period involved.
365-Day Year
A method of calculating interest that assumes all years have 365 days, used in some financial contexts.
- Develop the skill to precisely calculate simple interest on loans for a 365-day year.
- Calculate the overall repayment charge (initial capital plus interest) for short-dated loans.
Verified Answer
RW
Learning Objectives
- Develop the skill to precisely calculate simple interest on loans for a 365-day year.
- Calculate the overall repayment charge (initial capital plus interest) for short-dated loans.