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

accrued interest 175

Step-by-step explanation:

`rate * (days)/(360)`

`0.10 * (90)/(360) = .025`

`principal * equivalent \: rate`

`7000 * .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