Question

Chau obtains a loan for home renovations from a bank that charges simple interest at an annual rate of 16%. His loan is for $15,400 for 93 days. Assume each day is 1365 of a year. Answer each part below.

(a) Find the interest that will be owed after 93 days.
(b) Assuming Chau doesn't make any payments, find the amount owed after 93 days.

Answer 1

a) $627.81

b) $16,027.81

Explanation:

a) Interest = Principle × Rate as a decimal × Time in years

I = 15,400 × 0.16 × 93/365 (since each day is 1/365 of a year)

≈ 627.81

b) Amount owed = Principle + Interest

A = 15,400 + 627.81 = 16,027.81