Question

Paula Frye loaned $10,000 to her son's new business at 5% ordinary simple interest (360-day year). At the end of the loan period, Paula received the $10,000 plus $125 interest. Compute the length of the loan period (to the nearest day)

Answer 1

Answer:

91 days

Step-by-step explanation:

Amount loaned = $10,000.

Interest rate = 5%

Paula received $125 as interest .

Since, the interest rate is 5% , One has to pay the 5% of total amount loaned in a year.

in  a year , he has to pay $\frac{5}{100}$×10,000 = $500.

But he paid $125 as interest , So,

Length of loan period = $\frac{125}{500}$ Year  = $\frac{1}{4}$th Year  

                                     = 3 months

Thus, he paid the amount in 91 days. (Since one month will surely be of 31 days)