   Chapter 10.I, Problem 13RE ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

#### Solutions

Chapter
Section ### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

# Use the exact interest method (365 days) and the ordinary interest method (360 days) to compare the amount of interest for the following loans.Principal Rate (%) Time (days) Exact Interest Ordinary Interest__________________________________________________________________________$2,500 6 74 __________ ____________ To determine To calculate: The comparison between exact interest and the ordinary interest for the loan of$2500 over a period of 74 days at a rate of interest of 6% per annum by Exact interest method and ordinary interest method.

Explanation

Given Information:

The loan of $2500 is taken at the rate of interest, 6% per annum for the time period of 74 days. Formula Used: The simple interest formula is I=P×R×T, where T is the time period in years. For exact interest, T=Numberofdaysofloan365 For ordinary interest, T=Numberofdaysofloan360 Calculation: Consider the data provided as the loan of$2500 is taken at the rate of interest of 6% per annum for the time period of 74 days.

Then the Interest can be calculated in the following manner,

The time period for exact interest is,

T=74365

ExactInterest(I)=P×R×T

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