Asked by Allana Kielas on May 22, 2024
Verified
David Riley owns a five-year-old computer game business. Because of slack business, David needs to borrow $25,000. Compute the interest fee if David gets the loan for 120 days at 12% ordinary simple interest. (Use a 360-day year.)
Ordinary Simple Interest
Interest calculated on the principal amount of a loan or deposit, based on a simple interest rate over a specified period.
360-Day Year
A simplified calculation method used in finance, assuming a year consists of 360 days for the purpose of interest calculation.
- Be able to calculate and comprehend the ordinary simple interest for loans on a 360-day year basis.
- Establish the complete payback sum (principal in addition to interest) for short-term financings.
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Learning Objectives
- Be able to calculate and comprehend the ordinary simple interest for loans on a 360-day year basis.
- Establish the complete payback sum (principal in addition to interest) for short-term financings.