Question

what is the total payment required to pay off a promissory note issued for $500.00 at 8% ordinary interest and a 90 - day term? $? round to the nearest cent.

Explanation:

Step1: Recall the ordinary interest formula

The formula for ordinary interest is $I = P \times R \times \frac{T}{360}$, where $I$ is the interest, $P$ is the principal amount, $R$ is the annual interest rate (in decimal), and $T$ is the time in days.

Step2: Identify the given values

Here, $P = \$500.00$, $R = 8\% = 0.08$, and $T = 90$ days.

Step3: Calculate the interest

Substitute the values into the formula: $I = 500 \times 0.08 \times \frac{90}{360}$. First, calculate $\frac{90}{360} = 0.25$. Then, $500 \times 0.08 = 40$. Finally, $40 \times 0.25 = 10$. So the interest $I = \$10.00$.

Step4: Calculate the total payment

The total payment $A$ is the principal plus the interest, so $A = P + I$. Substituting the values, $A = 500 + 10 = 510$.

Answer:

$\$510.00$