Answer:
Interest for a 30 day month = $120.83
Explanation:
<em>Interest rate rate is the price paid by a borrower for the use of money and the return earned by a lender for postponing his consumption in favour of investment.
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Interest is computed in two ways; Simple interest and compound interest
Simple interest: This is the interest paid on the principal invested or borrowed. To calculate simple interest, we use the formula below:
Annual Simple interest= Principal × interest Rate (%) × Time.
Monthly simple interest =Principal ×interest Rate (%)× 30/360
= 20,000 × 7.25% × 30/360= 120.833
Interest for a 30 day month = $120.83
