what is the total payment required to pay off a promissory note issued for $1,000.00 at 10% ordinary…

what is the total payment required to pay off a promissory note issued for $1,000.00 at 10% ordinary interest and a 90 - day term? $? round to the nearest cent.

what is the total payment required to pay off a promissory note issued for $1,000.00 at 10% ordinary interest and a 90 - day term? $? round to the nearest cent.

Answer

Explanation:

Step1: Calculate the interest

The simple - interest formula is $I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate, and $t$ is the time in years. The principal $P=$1000$, the annual interest rate $r = 10%=0.1$, and the time $t=\frac{90}{360}$ (since ordinary interest uses 360 - day year). So $I=Prt=1000\times0.1\times\frac{90}{360}$. $I = 1000\times0.1\times\frac{1}{4}=25$

Step2: Calculate the total payment

The total payment $A$ is the sum of the principal $P$ and the interest $I$. So $A=P + I$. $A=1000 + 25=1025$

Answer:

$1025.00$