Question

Ben Hung signed a 75-day simple interest note for $11,280 with a bank that uses exact interest.

Answer 1

Given:
term: 75-day simple interest note
Principal : $11,280
rate: 12.3%

Interest = Principal * rate * term
Interest = 11,280 * .123 * 75/365
Interest = 285.09

Maturity Value = Principal + Interest
Maturity Value = 11,280 + 285.09
Maturity Value = 11,565.09

The problem stated "exact interest" this means that the 365-day year will be used. The use of 360-day year is called ordinary or banker's interest.

Given:
Amount borrowed: $9,805
term: 7 mos
rate: 8.5%

Interest = Principal * rate * term
Interest = 9,805 * 0.085 * 7/12
Interest = 486.16

Amount repaid = Principal + Interest
Amount repaid = 9,805 + 486.16 
Amount repaid = 10,291.16