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interest will Jody owe o

interest will Jody owe o

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On September 12, Jody Jansen went to Sunshine Bank to borrow $2,400 at 8% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. (Use Days in a year table) a. What interest will Jody owe on January 27? Note: Do not round intermediate calculations. Round your answer to the nearest cent. X Answer is complete but not entirely correct. $ 72.06 X Interest b. What is the total amount Jody must repay at maturity? Note: Do not round intermediate calculations. Round your answer to the nearest cent. Answer is complete but not entirely correct. Maturity value $ 2,472.06 X Return to question
Transcribed Image Text:On September 12, Jody Jansen went to Sunshine Bank to borrow $2,400 at 8% interest. Jody plans to repay the loan on January 27. Assume the loan is on ordinary interest. (Use Days in a year table) a. What interest will Jody owe on January 27? Note: Do not round intermediate calculations. Round your answer to the nearest cent. X Answer is complete but not entirely correct. $ 72.06 X Interest b. What is the total amount Jody must repay at maturity? Note: Do not round intermediate calculations. Round your answer to the nearest cent. Answer is complete but not entirely correct. Maturity value $ 2,472.06 X Return to question
Expert Solution
Step 1

Simple interest or ordinary interest doesn’t include compounding. It’s the prorated rate of total days for which the money stays invested out of total days in a year (365 days).

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