7.

Keith Wendell plans to borrow $5,810.

He has decided on a term of 95 days at 8% interest.

He has a choice of two lenders.

One calculates interest using a 360-day year and the other uses a 365-day year.

Find the amount of interest Wendell will save by using the lender with the 365-day year.

$1.54

$1.67

$1.63

$1.68

8.

Jake Winters plans to invest $7,400.

Find the interest rate required for the fund to grow to $7,844 in 8 months.

9%

5.7 %

8.5%

6%

Given:

Principal : $5,810

term: 95 days

rate: 8%

365/360 days

Interest = Principal * rate * term

Interest = 5,810 * 0.08 * 95/360

Interest = 122.66

Interest = 5,810 * 0.08 * 95/365

Interest = 120.98

122.66 - 120.98 = 1.68

Wendell will save $1.68 in interest if he chose the lender that uses 365-day year.

Given:

Principal - $7,400

Future Value - 7,844

term - 8 months

interest rate - x

Interest = 7844 - 7400 = 444

Interest = Principal * rate * term

444 = 7,400 * rate * 8/12

444 = 4,933.33 * rate

444 / 4,933.33 = rate

0.09 = rate

The interest rate required for the fund to grow to $7,844 in 8 months is 9%