On May 3, 2017, Leven Corp. negotiated a short-term loan of $685,000. The loan is due October 1, 2017, and carries a 6.86% interest rate. Use ordinary interest to calculate the interest.

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

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×

==> A= 685000 × 1.02784938489=704076 $

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