Question

Nolan Walker decided to buy a used snowmobile since his credit union was offering such low interest rates. He borrowed $3,400 at 4.25% on December 26, 2019, and paid it off February 21, 2021. How much did he pay in interest? (Assume ordinary interest and no leap year.) (Use Days in a year table.) (Do not round intermediate calculations. Round your answer to the nearest cent.) 

Answer 1

ANSWER:

Total number of days during loan period = (6 days in 2019) + (365 days in 2020) + (31 days + 21 days in 2021)

= 422 days

now,

ordinary interest paid = $3400 x 4.25% x (422/365)

= $167.07

Answer 2

It’s says assume “ordinary interest” it “exact interest” so you have to divide 422 by 360. (Not 365)

Answer 3

It says “ordinary interest” not “exact interest” so you have to divide 422 by 360. (Not 365) $3400 x .0425 x (422/360) = $169.39