Questions: Is the finance company likely to use exact or ordinary interest and why? A. Money lenders typically use exact interest (365 days per year vs. 360 days per year) for loans to require slightly lower interest. B. "Money lenders typically use ordinary interest (360 days per year vs. 365 days per year) for loans to require slightly higher interest. C. Money lenders typically use ordinary interest (360 days per year vs. 365 days per year) for loans to require slightly lower interest. D. Money lenders typically use exact interest (365 days per year vs. 360 days per year) for loans to require slightly higher interest. If Jillian takes the 90 days same as cash and pays within 90 days, what is her payoff amount? 9,318.75 (Round to the nearest cent as needed.) If she can't pay until April 30, how much additional money would she owe? (Assume ordinary interest and exact time and a non-leap year.) 789.95 (Round to the nearest cent as needed.) Jillian finds financing available through a local bank. Find the bank discount using ordinary interest for a 90 -day promissory note for 9,300 at 7% annual simple interest. Bank discount = 163 (Round to the nearest dollar as needed.) Find the proceeds using ordinary interest for a 90 -day promissory note for 9,300 at 7% annual simple interest. Proceeds = (Round to the nearest dollar as needed)

Solution Steps

1. To determine whether the finance company is likely to use exact or ordinary interest, consider the typical practices of money lenders. Ordinary interest (360 days per year) is often used to require slightly higher interest, which is beneficial for lenders.

2. To calculate Jillian's payoff amount if she pays within 90 days, add the sales tax to the purchase price. If she pays after 90 days, calculate the additional interest using the given rates and time period.

3. To find the bank discount for a 90-day promissory note, use the formula for ordinary interest: \( \text{Interest} = \text{Principal} \times \text{Rate} \times \frac{\text{Time}}{360} \). Subtract the interest from the principal to find the proceeds.

Money lenders typically use ordinary interest, which is calculated based on a 360-day year. This method often results in slightly higher interest charges compared to exact interest, which uses a 365-day year. Therefore, the likely interest type used by the finance company is ordinary interest.

To find the payoff amount if Jillian pays within 90 days, we first calculate the sales tax on the purchase price: \[ \text{Sales Tax} = 8750 \times 0.065 = 568.75 \] Adding the sales tax to the purchase price gives the total payoff amount: \[ \text{Payoff Amount} = 8750 + 568.75 = 9318.75 \]

If Jillian pays after 90 days, she incurs additional interest. Assuming she pays 30 days after the 90-day period, the additional interest is calculated using the monthly interest rate: \[ \text{Additional Interest} = (8750 + 568.75) \times 0.02 \times \frac{30}{30} = 186.375 \]

For a 90-day promissory note of \$9300 at 7% annual simple interest, the bank discount is calculated using ordinary interest: \[ \text{Bank Discount} = 9300 \times 0.07 \times \frac{90}{360} = 162.75 \] The proceeds, which is the amount Jillian receives after the discount, is: \[ \text{Proceeds} = 9300 - 162.75 = 9137.25 \]

Final Answer