what is the total payment required to pay off a promissory note issued for $400.00 at 6% ordinary interest…

what is the total payment required to pay off a promissory note issued for $400.00 at 6% 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 $400.00 at 6% ordinary interest and a 90 - day term? $? round to the nearest cent.

Answer

Answer:

$405.92

Explanation:

Step1: Identify the simple - interest formula

$I = Prt$, where $P$ is the principal amount, $r$ is the annual interest rate, and $t$ is the time in years.

Step2: Convert the time to years

The time $t$ is 90 days. Since there are 360 days in a year for ordinary - interest calculations, $t=\frac{90}{360}=0.25$ years. The principal $P = 400$ and the annual interest rate $r=0.06$.

Step3: Calculate the interest

$I=Prt=400\times0.06\times0.25 = 6$.

Step4: Calculate the total payment

The total payment $A$ is the sum of the principal and the interest, so $A = P+I=400 + 5.92=405.92$.