Problema Solution
23. Suppose you take out a loan for $5,000, at 6% ordinary interest. If the amount of interest is $91.67, what is the time period
Answer provided by our tutors
The future or maturity value A of P dollars at a simple interest rate r for t years is
A = P(1 + rt)
Interest found using a 360-day year is called ordinary interest
P = $5,000
r = 6% or 0.06
A = $91.67 + $5,000 = 5,091.67
t = days/360
5091.67 = 5000(1 + 0.06*t)
by solving we find
t = 91.67/300 years
t = 0.3055667 years
d = the number of days
d/350 = 91.67/300
by solving we find
d = 106.95 days
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