The daily interest for the borrower’s loan is $17.44. They close on the 15th of the month, and there are 15 days before the 1st of the next month. How much prepaid interest do they... The daily interest for the borrower’s loan is $17.44. They close on the 15th of the month, and there are 15 days before the 1st of the next month. How much prepaid interest do they have to pay?
Understand the Problem
The question is asking us to calculate the prepaid interest for a loan based on a daily interest amount and the number of days until the next month. We need to multiply the daily interest by the number of days (15) to find the total prepaid interest.
Answer
The total prepaid interest is $D \times 15$, where $D$ is the daily interest amount. For $D = 5$, it equals $75$.
Answer for screen readers
The total prepaid interest is given by the formula $D \times 15$. For example, if the daily interest ($D$) is $5$, the total prepaid interest would be $75$.
Steps to Solve
- Identify the daily interest amount
Assume that the daily interest amount is given as $D$. For example, if the daily interest is $5, then $D = 5$.
- Determine the number of days until the next month
In this case, we know that the number of days until the next month is given as 15 days.
- Calculate the total prepaid interest
To find the total prepaid interest, we multiply the daily interest amount by the number of days:
$$ \text{Total Prepaid Interest} = D \times \text{number of days} $$
For our example, if $D = 5$, the calculation would be:
$$ \text{Total Prepaid Interest} = 5 \times 15 $$
- Compute the final result
Perform the multiplication to get the total prepaid interest:
$$ \text{Total Prepaid Interest} = 75 $$
The total prepaid interest is given by the formula $D \times 15$. For example, if the daily interest ($D$) is $5$, the total prepaid interest would be $75$.
More Information
Prepaid interest is commonly calculated on loans and mortgages, allowing the lender to receive interest upfront for the period before the first payment is made. The total prepaid interest can vary based on the daily interest amount.
Tips
- Forgetting to multiply by the correct number of days.
- Using the wrong daily interest rate.
- Miscalculating the daily interest amount.
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