On May 19, Bette Santoro borrowed $3,000 from Resse Bank at a rate of 12½%. The loan is to be repaid on October 8. Assuming the loan is based on exact interest, what's the total interest cost to Bette?

A. $145.89
B. $345.89
C. $175.89
D. $265.89

Question

On May 19, Bette Santoro borrowed $3,000 from Resse Bank at a rate of 12½%. The loan is to be repaid on October 8. Assuming the loan is based on exact interest, what's the total interest cost to Bette?

A. $145.89
 B. $345.89
 C. $175.89
 D. $265.89

Mercury · Answer

there are exactly 142 days between May 19 and October 8 (honestly I just used a days between dates calculator to do this, although you could do this by hand)

therefore, (142/365) of one year has passed. multiply this by the principal (3000) and the interest rate (0.0125) to find the total interest.