On September 12, Jody Jansen went to Sunshine Bank to borrow $2,100 at 6% intere

Question

On September 12, Jody Jansen went to Sunshine Bank to borrow $2,100 at 6% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. (Use Days in a year table)

What ordinary interest will Jody owe on January 27? (Do not round intermediate calculations. Round your answers to the nearest cent.

Days in year 1:

Days in year 2"

Total days:

Calculate I= Principal x Rate x Time = Interest

What is the total amount Jody must pay at maturity?

On September 12, Jody Jansen went to Sunshine Bank to borrow $2,100 at 6% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. (Use Days in a year table)

Explanation / Answer

Part 1 Assuming 365 days in a year Days in year 1 = 110 days (18 Days + 31days+30 days +31 days) Days in year 2 = 27 Days (27 days) Part 2 Calculate ordinery interest on january 27 Principle amount $2,100 Rate of interest 6% Interest = Principle *rate*time Year 1 = $2100*6%*110days/365 days = $37.97 Year 2 = $2100*6%*27days/365 days = $9.32 Total interest = Year 1 interest + year 2 interest = $37.97+$9.32 = $47.29 Part 3 Total amount pay at maturity Total amount = Principle + total interest = $2100+$47.29 = $2,147.29 Note : Assuming interest will not be charged at the compound interest basis, it will be charged at simple basis.

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