Question

A $14,400 loan taken out on May 21, 2018, was repaid with interest at 45/4% per annum on July 19, 2019

How much interest was paid? (Do not round intermediate calculations and round your final answer to 2 decimal places.)
Interest paid $ _____

Answer 1

The total interest paid on a $14,400 loan at 11.25% annual interest from May 21, 2018, to July 19, 2019, is $1,885.06.

Step-by-step explanation:

To calculate how much interest was paid on a $14,400 loan taken out on May 21, 2018, and repaid on July 19, 2019, with an interest rate of 45/4% per annum (which is 11.25% when converted to a percentage), we first need to determine the time period over which the interest accrued. The loan was outstanding for 1 year and 59 days. Since interest rates are typically given on an annual basis, we will convert this time period into years.

The calculation involves the following steps:

1. Convert days into the fraction of a year: 59 days / 365 days = 0.16164 years.
2. Add the fraction of a year to the full year to get the total time in years: 1 year + 0.16164 years = 1.16164 years.
3. Calculate the interest using the formula: Interest = Principal × Rate × Time.
   Interest = $14,400 × 0.1125 × 1.16164 years = $1,885.06.

Rounding the final answer to two decimal places, the total interest paid is $1,885.06.