Asked by CHRISTOPHER FARRELL on May 25, 2024
Verified
Wendy Ellison needed to borrow $2,500 to pay her son's school tuition. She borrowed the money from her credit union at 8% ordinary simple interest (360-day year) and, repaid a total of $2,600 at the end of the loan period. Compute the length of the loan period. (To the nearest day.)
Ordinary Simple Interest
Interest calculated on the principal amount of a loan or investment, based on the original amount without compounding.
360-Day Year
An accounting method that simplifies interest calculations by using 360 days as the length of a year.
Loan Period
The duration over which a borrower is obligated to repay a loan, typically specified in months or years.
- Develop the capability to comprehend and calculate simple interest for loans, considering a 360-day year as the period.
- Calculate the length of the loan period given the interest rate, principal, and total interest.
Verified Answer
NG
Navdeep GhumanMay 28, 2024
Final Answer :
I = $2,600 - $2,500 = $100; T = I ÷ (PR) = $100 ÷ ($2,500 × 0.08) = 0.5 year; 0.5 × 360 = 180 days
Learning Objectives
- Develop the capability to comprehend and calculate simple interest for loans, considering a 360-day year as the period.
- Calculate the length of the loan period given the interest rate, principal, and total interest.