Joyce took out a loan for $21,900 at 12% on March 18, 2015, which will be due on January 9, 2016. Using ordinary interest, Joyce will pay back on Jan. 9 a total amount of:
A) $2,167.10
B) $24,068.10
C) $24,038.40
D) $2,138.40
E) None of these

Question

Quizplus · Accepted Answer

Ordinary interest is calculated using the formula I = PRT, where P is the principal, R is the rate, and T is the time in years. The time from March 18, 2015, to January 9, 2016, is 297 days. Using ordinary interest (360 days in a year), T = 297/360. The interest is I = $21,900 * 0.12 * (297/360) = $2,168.10. The total amount to be paid back is the principal plus interest: $21,900 + $2,168.10 = $24,068.10.

Joyce Took Out a Loan for $21,900 at 12% on March