Answer:
704076 $
Explanation:
Exact statement of the question is:
May 3, 2007, Leven Corp. negotiated a short-term loan of $685,000. The loan is due October 1, 2007, and carries a 6.86% interest rate. Use ordinary interest to calculate the interest. What is the total amount Leven would pay on the maturity date? (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
Solution:
Fro 3rd May to October 1st. 2017 there are 151 days
But 365 days = 1 year
==> 151 days = 151× 1/365 =0.414 years
But we use 1 year as one term
==> 1year = 1T
==> T = 0.414
R= 6.86
P= 685000
A=?
We use formula for the term:
A= P[tex](1+ \frac{R}{100} )^{T}[/tex]
Where A= ammount at the end of term
P= Loan amount
R= Rate of interest
T= No. of terms
Putting values in this formula;
==> A= 685000×[tex](1+\frac{6.86}{100}) ^{0.414}[/tex]
==> A= 685000 × 1.02784938489=704076 $
