# Quiz 10: Simple Interest and Promissory Notes

To find the amount of interest for a loan of $15,000 at 13% interest for 120 days, apply the simple interest formula. The simple interest formula is stated as where P is the principal, R is the rate of interest and T is the time factor. Now find the amount of interest of the loan by using the exact interest method. Exact interest uses 365 days as the denominator of the time factor in the simple interest formula. Now substituting 15,000 for P, 13% for R and for T in the simple interest formula gives Hence the amount of interest for the loan by using the exact interest method is .

The practice of borrowing and lending money dates back in history for thousands of years. Institutions such as banks, savings and loans, and credit unions are specifically in business to borrow and lend money. The price or rental fee charged by a lender to a borrower for the use of money is known as .

To find the amount of interest for a loan of $1,700 at % interest for 33 days, apply the simple interest formula. The simple interest formula is stated as where P is the principal, R is the rate of interest and T is the time factor. Now find the amount of interest of the loan by using the exact interest method. Exact interest uses 365 days as the denominator of the time factor in the simple interest formula. Now substituting 1,700 for P, % for R and for T in the simple interest formula gives Hence the amount of interest for the loan by using the exact interest method is .

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