Chapter 10.I, Problem 46RE

### Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

Chapter
Section

### Contemporary Mathematics for Busin...

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

# At the City National Credit Union, a 7 % , $8,000 loan for 180 days had interest charges of$276.16. What type of interest did City National use. ordinary or exact?

To determine

Which type of method, ordinary method and exact method use for the interests if a Principle amount of \$8,000 at a rate of interest of 7% and over a period of time of 190 Days.

Explanation

The Interest amount can be estimated by using the formula InterestI=PRT.

In this formula I represents Interest accrued over the 180 days, P represents the Principal amount issued as a loan, R represents the rate of interest at which the loan is given and T represents the time period.

The amount of interest accrued from the issue of principal at a rate of interest of 9¾ over a

Period of 180 days by using the ordinary method can be done as shown below:

InterestAmount=PTR=80008100

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