Question

What is the total paymentrequired to pay off a promissorynote issued for $500.00 at 8%ordinary interest and a 90-dayterm?

Answer 1

Solution:

Given in the question, we have the amount to be

$=\text{ \ }500$

The interest rate given is

$=8\%=\frac{8}{100}=0.08$

The time is given below as

$\begin{gathered} t=90days \\ t=\frac{90}{365}=0.25 \end{gathered}$

Step 1:

We will calculate the simple interest

$\begin{gathered} I=\frac{PRT}{100} \\ I=\frac{500\times8\times0.25}{100} \\ I=\text{ \ }10.00 \end{gathered}$

Step 2:

We will calculate the total repayment using the formula below

$\begin{gathered} T.P=A+I \\ T.P=\text{ \ }500+\text{ \ }10 \\ T.P=\text{ \ }510.00 \end{gathered}$

Hence,

The final answer is

$\Rightarrow\text{ \ }510.00$

OPTION C is the right answer