Using ordinary interest, how much will he need to pay back at the end of 180 days? Round to the nearest cent.

Question

Recently Mr. Robie, the owner of the Black Cat Bakery, purchased some equipment for the Bakery. Mr. Robie purchased $27,000 in additional equipment, and made a cash down payment of $2,700 .He secured a loan for the remaining $24,300, with an interest rate of 2.5%, and a time period of 180 days. 

 

Answer 1

The interest for 180 days at 2.5% per annum is 24300×2.5/100×180/365=$299.59.

Total amount to pay is 24300+299.59=$24599.59.

In some calculations of this sort the number of days in the year is put at 360. If we apply this in this problem, the interest would be $303.75, making the amount due $24603.75.