what is the total payment required to pay off a promissory note issued for $500.00 at 8% ordinary interest…

what is the total payment required to pay off a promissory note issued for $500.00 at 8% 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 $500.00 at 8% ordinary interest and a 90 - day term? $? round to the nearest cent.

Answer

Answer:

$510.00

Explanation:

Step1: Calculate the interest

The simple - interest formula is $I = Prt$. Here, $P=$500$, $r = 8%=0.08$, and $t=\frac{90}{360}$ (since ordinary interest uses 360 - day year). So $I=500\times0.08\times\frac{90}{360}$. $I = 500\times0.08\times\frac{1}{4}=10$

Step2: Calculate the total payment

The total payment $A$ is the sum of the principal $P$ and the interest $I$. So $A=P + I$. $A=500 + 10=510$