Question

Cathy borrowed $121,161.00 from her parents to finance vacation. If interest was charged on the loan at 9.42% p.a, how much does she have to pay in 150 days?

a) $14,272.47
b) $14,792.61
c) $13,832.59
d) $13,267.14

Answer 1

To find out how much Cathy has to pay in 150 days on a loan of $121,161.00 with an interest rate of 9.42% p.a., we need to calculate the amount of interest using the formula: Interest = Principal x Rate x Time. The correct answer is d) $13,267.14.

Step-by-step explanation:

To find out how much Cathy has to pay in 150 days, we need to calculate the amount of interest she will owe on the loan for that period of time. The formula to calculate simple interest is: Interest = Principal x Rate x Time. Principal = $121,161.00, Rate = 9.42% p.a., Time = 150 days. Since the rate is given per annum, we need to convert 150 days to years by dividing it by 365: Time = 150/365 = 0.4109 years.

Now, we can calculate the interest: Interest = $121,161.00 x 0.0942 x 0.4109 = $4,128.6575. Therefore, Cathy has to pay approximately $4,128.66 in 150 days.

The correct answer is d) $13,267.14, which is the closest option to $4,128.66.