Tom and Jerry both took out loans for $600.00 on 2011-01-14. Both loans mature on 2011-07-11 and have the same simple interest rate i. But Tom's loan uses the daycount convention ACT/360, and Jerry's loan uses the daycount ACT/365. True or false: Jerry will pay less to settle the loan than Tom. Answer with explanation please.
Tom and Jerry both took out loans for $600.00 on 2011-01-14. Both loans mature on 2011-07-11 and have the same simple interest rate i. But Tom's loan uses the daycount convention ACT/360, and Jerry's loan uses the daycount ACT/365. True or false: Jerry will pay less to settle the loan than Tom. Answer with explanation please.
Chapter5: Gross Income: Exclusions
Section: Chapter Questions
Problem 5DQ
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Tom and Jerry both took out loans for $600.00 on 2011-01-14. Both loans mature on 2011-07-11 and have the same simple interest rate i. But Tom's loan uses the daycount convention ACT/360, and Jerry's loan uses the daycount ACT/365.
True or false: Jerry will pay less to settle the loan than Tom.
Answer with explanation please.
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