A $40,000 loan at 4% dated June 10 is due to be paid on October 11. The amount of interest is (assume ordinary interest):
A)$503.00
B)$2,500.00
C)$546.67
D)$105.33
E)None of these

Question

Quizplus · Accepted Answer

First, we need to find the number of days between June 10 and October 11.

June 10 to July 10 = 30 days 
July 10 to August 10 = 31 days 
August 10 to September 10 = 31 days 
September 10 to October 11 = 31 days 
Total days = 123

Next, we can use the simple interest formula:

I = Prt

Where I is the interest, P is the principal (loan amount), r is the interest rate (as a decimal), and t is the time (in years or fractions of a year).

I = 40000 x 0.04 x (123/365)

I = 546.67

Therefore, the amount of interest on the loan is $546.67.

A $40,000 Loan at 4% Dated June 10 Is Due