Question

Lipscomb & Lipscomb Veterinary Clinic accepted a 90 day, 10%, $7,000 note from Doug McLeod for surgery performed on Doug's horse, Pookie. How much interest will accrue on the note by the maturity date?

Answer 1

Answer:

accrued interest 175

Explanation:

$rate \times \frac{days}{360}$

$0.10 \times \frac{90}{360} = .025$

$principal \times equivalent \: rate$

$7000 \times .025 = 175$

First, we need to convert the annual rate to a 90days equivalent rate.

Then, we apply the equivalent rate to the principal.

If it is not expressed otherwise, use a 360 days year

Accuerd Interest

175