On September 12, Jody Jansen went to Sunshine Bank to borrow $2,200 at 7% intere

Question

On September 12, Jody Jansen went to Sunshine Bank to borrow $2,200 at 7% interest. Jody plans to repay the loan on January 27. Kelly O’Brien met Jody Jansen at Sunshine Bank and suggested she consider the loan on exact interest. (Use Days in a year table.)

a.

What interest will Jody owe on January 27? (Do not round intermediate calculations.Round your answer to the nearest cent.)

b.

What is the total amount Jody must repay at maturity? (Do not round intermediate calculations.Round your answer to the nearest cent.)

c.

How much would she save in interest if she considers the loan on exact interest instead of ordinary interest? (Do not round intermediate calculations. Round your answer to the nearest cent.)

On September 12, Jody Jansen went to Sunshine Bank to borrow $2,200 at 7% interest. Jody plans to repay the loan on January 27. Kelly O’Brien met Jody Jansen at Sunshine Bank and suggested she consider the loan on exact interest. (Use Days in a year table.)

Explanation / Answer

Days = 30+31+30+31+27-12 137 interest percentage 137/ 365 x .07 interest percentage 0.026273973 Principal 2200 Interest due on january 27 = Principal x rate of interest 57.80 Amount paid at maturity = Principal + interest 2257.80 Ordinary Interest 137/ 360 x .07 0.026638889 58.60555556 Amount under ordinary interest 2258.61 Total saving 0.80

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