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Answer :
Final answer:
Based on the given interest rate and terms, using exact interest, the total repayment amount would be $3797.26, while using ordinary interest, it would be $3800.00, leading to different repayment amounts. So, the correct answer is option c) Different amounts for exact and ordinary interest.
Explanation:
Calculating Repayment with Exact and Ordinary Interest: To determine the repayment amount for a loan using exact interest and ordinary interest, we need to apply two different calculations, considering that the exact interest method uses a year of 365 days (or 366 for leap years) and ordinary interest assumes a year of 360 days.
For the exact interest method, the formula is: Interest = Principal × Rate × Time / 365. For a $3600 loan at 8% for 250 days: Interest = $3600 × 0.08 × 250 / 365 = $197.26. The total repayment would be: Repayment = Principal + Interest = $3600 + $197.26 = $3797.26
For the ordinary interest method, the formula is: Interest = Principal × Rate × Time / 360. Interest = $3600 × 0.08 × 250 / 360 = $200.00. The total repayment would be: Repayment = Principal + Interest = $3600 + $200 = $3800.00
The correct option here is c) Different amounts for exact and ordinary interest, with the exact interest calculation resulting in a repayment of $3797.26 and the ordinary interest calculation resulting in a repayment of $3800.00.
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