Question

Colin needs to borrow $1,500 for car repairs. How much interest will he pay if the rate is 4.9% and he has 125 days to repay the loan? (Be sure to round the time to the nearest hundredth. Example: 250 days divided by 365 days is .68, not .684.)

Answer 1

Hello there.
Colin needs to borrow $1,500 for car repairs. How much interest will he pay if the rate is 4.9% and he has 125 days to repay the loan? (Be sure to round the time to the nearest hundredth. Example: 250 days divided by 365 days is .68, not .684.)$25.17.

Answer 2

For the answer to the question above, I'll use one-time computing.
Interest = Principal * rate * (loan duration/time unit)
= $1500 * 4.9% * (125 days/365 days)
Normally, a bank or accountant WOULD NOT use your method of rounding in the middle of the calculation but rather would round the final result. This is the normal way to handle all such mathematical processes. However, for your question,
= $1500 * 4.9% * 0.34
= $24.99

If you don't do the rounding in the middle of the calculation, the answer is $25.17.
I hope this helps.