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On September 12, Jody Jansen went to Sunshine Bank to borrow $3,700 at 12% interest. Jody...

On September 12, Jody Jansen went to Sunshine Bank to borrow $3,700 at 12% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary 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.)

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Answer #1

Jody Jansen borrow amount $3,700 at 12% interest and interest is ordinary interest.

Ordinary interest calculated with considering 360 days instead of 365.

No of days carrying interest 12 September to 27 January

month days

September 18

October 31

November 30

December 31

January 27

total days are 137

a) principal amount  =$3700, interest = 12/100, days =137/360

  

b) total amount to be paid at maturity is $3700 + $168.97 which sum to be $3868.97

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