Question

what is the total payment required to pay off a promissory note issued for $750.00 at 12% 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 \( P \) 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 \( P = \$750.00 \), \( r = 12\% = 0.12 \), and \( t = 180 \) days.

Step3: Calculate the interest

Substitute the values into the interest formula:
\( I = 750 \times 0.12 \times \frac{180}{360} \)
First, calculate \( \frac{180}{360} = 0.5 \). Then, \( 750 \times 0.12 = 90 \). Then, \( 90 \times 0.5 = 45 \). So the interest \( I = \$45.00 \).

Step4: Calculate the total payment

The total payment \( A = P + I = 750 + 45 = 795 \).

Answer:

\$795.00