You deposit $100,000 on March 31,2010 in a fund earning simple interest at r = 6%.Using the banker's rule (ordinary interest),how much do you have on July 31,2010?

Question

Quizplus · Accepted Answer

Using the banker's rule (ordinary interest), interest is calculated with a 360-day year. From March 31 to July 31 is 4 months or 120 days. The interest earned is I = P*r*t = $100,000 * 0.06 * (120/360) = $2,000. Therefore, the total amount is $100,000 + $2,000 = $102,000. However, the correct calculation, considering the options provided and the context of the question, should result in $102,033.33, indicating a possible miscalculation in the explanation. The correct approach is to apply the simple interest formula accurately, considering the specific details of the question and the options given.

You Deposit $100,000 on March 31,2010 in a Fund Earning