Question

what is the total payment required to pay off a promissory note issued for $500.00 at 10% 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 $I = P \times R \times \frac{T}{360}$, 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. The total payment $A$ is the sum of the principal and the interest, so $A = P + I$.

Step2: Identify the given values

We have $P = \$500.00$, $R = 10\% = 0.10$, and $T = 180$ days.

Step3: Calculate the interest

Substitute the values into the interest formula:
\[
I = 500 \times 0.10 \times \frac{180}{360}
\]
First, calculate $\frac{180}{360} = 0.5$. Then, $500 \times 0.10 = 50$. Then, $50 \times 0.5 = 25$. So, the interest $I = \$25.00$.

Step4: Calculate the total payment

The total payment $A$ is the principal plus the interest:
\[
A = 500 + 25 = 525
\]

Answer:

$\$525.00$