Find the ordinary interest on a loan of $350 at 12% annually made on July 9 and due October 31.
A) $13.30
B) $13.18
C) $42.00
D) $363.30

Question

Quizplus · Accepted Answer

The ordinary interest formula is I = PRT, where P is the principal ($350), R is the annual interest rate (12% or 0.12), and T is the time in years. From July 9 to October 31 is 114 days (31 days in July from the 9th, plus 31 in August, 30 in September, and 22 in October). In years, this is 114/365 = 0.3123 years. Thus, I = $350 * 0.12 * 0.3123 = $13.30.

Find the Ordinary Interest on a Loan of $350 at 12