Question

Jane Dimas obtained a single-payment loan of $420 to pay a repair bill. She agreed to repay the loan in 90 days at an interest rate of 6.25% ordinary interest. What is the ordinary interest?

Answer 1

The ordinary interest is $6.5625

Explanation:

1. Jane Dimas obtained a single payment loan of $420.

=> Principal is $420

2. She agreed to repay the loan in 90 days

Time is 90 days

3. at an interest rate of 6.25% ordinary interest.

Rate is 6.25% = 6.25/100

The ordinary interest is given as

Principal × Rate × Time/360

= 420 × 6.25/100 × 90/360

= 6.5625

Answer 2

Answer: the ordinary interest is $6.5625

Explanation:

In calculating ordinary interest, the number of days in a month is considered to be 360 days. We would apply the formula for determining simple interest which is expressed as

I = PRT/100

Where

I represents interest paid on the loan.

P represents the principal or amount taken as loan

R represents interest rate

T represents the duration of the loan in years.

From the information given,

P = $420

R = 6.25%

T = 90 days = 90/360 = 0.25 day

I = (420 × 6.25 × 0.25)/100

= $6.5625