Question

Hernandez engineering borrows $6,500, at 6 1 2 % interest, for 120 days. If the bank uses the ordinary interest method, how much interest (in $) will the bank collect?

Answer 1

The bank will collect approximately $139.04 in ordinary interest from Hernandez Engineering for a loan of $6,500 at an interest rate of 6 1/2 % over 120 days.

Step-by-step explanation:

To calculate the amount of ordinary interest that Hernandez Engineering will pay on a loan of $6,500 at 6 1/2 % interest for 120 days, we can use the formula for ordinary interest:

I = PRT

where:

• I is the interest
• P is the principal amount (the initial amount of the loan)
• R is the annual interest rate (in decimal form)
• T is the time in years

First, convert the interest rate from a percentage to a decimal by dividing by 100:

R = 6.5% / 100 = 0.065

Next, convert the period from days to years:

T = 120 days / 365 days = 0.3287671232876712 (approximately)

Now, plug these values into the formula:

I = $6,500 * 0.065 * 0.3287671232876712

I = $139.04109589041095

Hence, the bank will collect approximately $139.04 in interest from Hernandez Engineering.