Question

On September 12, Jody Jansen went to Sunshine Bank to borrow $3,500 at 10% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. What is the total interest Jody will pay on the loan?

Answer 1

Jody will pay a total interest of $128.45 on the loan.

Step-by-step explanation:

To find the total interest Jody will pay on the loan, we can use the formula:

Total Interest = Principal × Rate × Time

Here, the principal (P) is $3,500, the rate (R) is 10% (0.10 as a decimal), and the time (T) is the difference between the repayment date and the loan date in years.

Since the loan was taken on September 12 and will be repaid on January 27 of the following year, the time is approximately 4.4 months, which is equivalent to 4.4/12 = 0.367 years.

Putting the values into the formula, we have:

Total Interest = $3,500 × 0.10 × 0.367 = $128.45

Therefore, Jody will pay a total interest of $128.45 on the loan.