SOLUTION: Find the ordinary and exact interest on 8800 for 85 days at 11�% simple interest.

Question 1085959: Find the ordinary and exact interest on 8800 for 85 days at 11�% simple interest.
Answer by jim_thompson5910(35256) (Show Source): You can put this solution on YOUR website!
With ordinary interest, there are 360 days in a year
With exact interest, there are 365 days in a year

The formula we use is
simple interest = P*r*t
P = principal
r = interest rate in decimal form
t = time in years

The interest rate of 11�% is equivalent to
11�% = [(11)+(3/4)]% = [11+0.75]% = 11.75%
Convert from percent to decimal form
11.75% = 11.75/100 = 0.1175

So r = 0.1175
The time value t for ordinary interest is t = 85/360 years

Ordinary interest = P*r*t
Ordinary interest = 8800*0.1175*(85/360)
Ordinary interest = 244.138888888889
Ordinary interest = 244.14

-----------------------------------------------------

Repeat the steps above, but now use t = 85/365 to get the exact interest earned

Exact interest = P*r*t
Exact interest = 8800*0.1175*(85/365)
Exact interest = 240.794520547946
Exact interest = 240.79

-----------------------------------------------------

In summary:
Ordinary interest = 244.14
Exact interest = 240.79

You earn more with ordinary interest because there are 5 less days to compute interest for that given year.
RELATED QUESTIONS
Find the interest and final amount on $20, 100 at 9% simple interest for 89... (answered by fractalier)

Find both the exact & ordinary interest on 34,200 at 9 1/4% for 126 days. Please show me... (answered by stanbon)

$23,000 at 6% for 180 days (use ordinary interest method for this simple interest... (answered by srinivas.g)

the simple interest at 11% for 90 days on a 14.000 loan... (answered by rfer)

On May 11, 1993, a note due on January 10, 1994 was discounted at 12.12% simple discount. (answered by CPhill)

find the exact interest on a loan of $33,000 at 8% annually for 25... (answered by checkley77)

Find the exact interest on a loan of 6,000 at 9% annually for 80... (answered by rfer)

Find the exact interest on a loan of $32,600 at 8% annually for 35 days.... (answered by stanbon)

Find the simple interest on a $700 loan for 45 days at a 15% rate of interest... (answered by rfer)