Chapter 10.I, Problem 9RE

### 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

# 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 9. $32,400 8.6 241 ______________ ________________ To determine To calculate: The comparison between exact interest and the ordinary interest for the loan of$32400 over a period of 241days at a rate of interest of 8.6% per annum by Exact interest method and ordinary interest method.

Explanation

Given Information:

The loan of $32400 is taken at the rate of interest, 8.6% per annum for the time period of 241 days. Formula used: The simple interest formula is: I=P×R×T Where, T is the time period in years, P is principal value and R is rate. For exact interest, T=Number of days of loan365 For ordinary interest, T=Number of days of loan360 Calculation: Consider the data provided as the loan of$32400 is taken at the rate of interest of 8.6% per annum for the time period of 241 days.

Then the Interest can be calculated in the following manner,

The time period for exact interest is,

T=241365 year.

Assume, P=$32400, R=8.6% and T=241365 As, the formula for simple interest: I=P×R×T To find the value of interest, substitute P=$32400, 8

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