Final answer:
The amount of pre-paid interest to the borrower can be calculated using loan amount, interest rate, and time. By assuming that the time is measured in days and converting it into years, we can calculate the pre-paid interest. The amount of pre-paid interest to the borrower is approximately $10,611.88.
Step-by-step explanation:
The amount of pre-paid interest to the borrower can be calculated using the formula:
Prepaid interest = Loan amount × interest rate × time
In this case, the loan amount is $205,000, the interest rate is 5.5% (or 0.055 as a decimal), and the time is given as November 15.
However, to calculate the amount of pre-paid interest, we need to know the time in years. If we assume that the time is measured in days, we can convert it into years by dividing by 365 (since there are 365 days in a year)
If we assume that November 15 is day 319 in the year, then the time in years would be:
Time in years = 319 / 365 ≈ 0.874
Now we can calculate the pre-paid interest:
Prepaid interest = $205,000 × 0.055 × 0.874 ≈ $10,611.88
Therefore, the amount of pre-paid interest to the borrower is approximately $10,611.88.