Question

what is the total payment required to pay off a promissory note issued for $600.00 at 8% ordinary interest and a 180 - day term? $? round to the nearest cent.

Explanation:

Step1: Recall the ordinary interest formula

The formula for ordinary interest is $I = P \times r \times t$, where $P$ is the principal amount, $r$ is the annual interest rate (in decimal), and $t$ is the time in years. For ordinary interest, we use a 360 - day year, so $t=\frac{\text{number of days}}{360}$.

Given $P = 600$, $r=0.08$ (since 8% = 0.08), and the number of days $= 180$. So $t=\frac{180}{360}=0.5$.

Step2: Calculate the interest

Substitute the values into the interest formula: $I=600\times0.08\times0.5$.

First, calculate $600\times0.08 = 48$. Then, $48\times0.5 = 24$. So the interest $I = 24$.

Step3: Calculate the total payment

The total payment $A$ is the principal plus the interest, so $A=P + I$.

Substitute $P = 600$ and $I = 24$: $A=600 + 24=624$.

Answer:

$\$624.00$