Pace Co.borrowed $20,000 at a rate of 7.25%,simple interest,with interest paid at the end of each month.The bank uses a 360-day year.How much interest would Pace have to pay in a 30-day month?
A)$120.83
B)$126.88
C)$133.22
D)$139.88
E)$146.87

Question

Quizplus · Accepted Answer

We can use the simple interest formula to find the interest for a 30-day month:
Interest = Principal x Rate x Time
Since the bank uses a 360-day year, we need to divide the annual rate by 12 and the time by 12 as well:
Interest = $20,000 x 0.0725 x (30/360) = $120.83
Therefore, the correct answer is A) $120.83.

Pace CoBorrowed $20,000 at a Rate of 7