Pace Co

Accounting Jun 22, 2021

Pace Co. borrowed $20,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month. The bank uses a 360-day year. How much interest would Pace have to pay in a 30-day month?
a. $120.83 b. $126.88 c. $133.22 d. $139.88 e. $146.87

Expert Solution

Answer

a .

Explanation

Computation of Simple Interest:

Simple Interest = Principal*Rate*Time

= 20,000*7.25%*30/360

Simple Interest = 120.83

So, the correct option is A "120.83".

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