Question

Bank a charges ordinary interest while Bank B charges exact interest Susan Carter wants to borrow $11,000 for 90 days at 9% which bank offers a better deal ?

Answer 1

We are given that Bank A charges ordinary interest for a loan of $11000 at a rate of 9% for a period of 90 days, we can calculate the total interest using the formula for ordinary interest, this is:

`\text{Interest =(amount)(rate)(days/360)}`

Replacing that we get:

`\text{Interest}=(11000)(0.9)((90)/(360))`

Solving we get:

`\text{Interest}=2475`

Now, bank B charges exact interest, the formula is:

`\text{Interest}=(amount)(rate)((days)/(365))`

Replacing we get:

`\text{Interest}=(11000)(0.9)((90)/(365))`

solving the operation:

`\text{Interest}=2441`

Therefore, she will pay less interest to Bank B. Bank B offers a better deal.