Question

What is the difference between the exact simple interest and the ordinary simple interest on a 200-day loan of 5,000 at 12%

Answer 1

4.56

Explanation:

"Ordinary" interest will be more than "exact" interest because the number of days in a year is a smaller value. The difference will be ...

Io = Prt = 5000(0.12)(200/360) = 333.33

Ie = Prt = 5000(0.12)(200/365) = 328.77

The difference is ...

333.33 -328.77 = 4.56 . . . the difference in interest values

_____

Additional comment

The question asks for the difference between exact and ordinary interest, so the result is technically negative:

328.77 -333.33 = -4.56