Question

A company borrows $11,000 at 9% for 60 days. Find (a) the amount of interest due and (b) the total amount that must be paid after 60 days. (a) The interest due is $

Answer 1

Assuming the interest rate is an anual one we find the interest by the formula:

$I=\frac{Prt}{365}$

where P is the principal, r is the interes rate and t is the time of the loan. (In this case we are dividing the result by 365 so we know the exact interes in 60 days).

Then:

$\begin{gathered} I=\frac{11000\cdot0.09\cdot60}{365} \\ =162.74 \end{gathered}$

Therefore the interest is $162.74.

To find the total amount that must be paid we add the interest to the principal:

$11000+162.74=11162.74$

Summing up:

a)

$162.74

b)

11162.74