On May 30,2012 a businessman loans $15,000 in the bank for the expansion of his restaurant.it was agreed that he will pay the amount with 6% rate of interest on August 10,2012.what is the ordinary simple interest to be paid?
$180
$160
$1800
$220
Explanation:
Principal amount is $15,000.
Rate of interest is 6%.
Counting the number of days from May 30 to August 10;
Note: Since May 30 is the beginning date, it is not included in counting.
May 31 1
June 1-30 30
July 1-31 31
August 1-10
10 Total 72 days
Converting days into years:
72 days x (1year360days) = 15years
Using the formula for solving the simple interest;
Interest = Principal x Rate x Time
Interest = $15,000 x 6% x 15
Interest = $15,000 x 0.06 x 15
Interest = $180
Therefore, the businessman will pay $180 interest.