To determine the total payment required to pay off a promissory note issued for [tex]$750.00 at 6% ordinary interest over a 90-day term, follow these detailed steps:
### Step 1: Understand key terms and formula
We need to calculate the interest on the promissory note using simple interest formula:
\[ \text{Interest} = \text{Principal} \times \text{Annual Interest Rate} \times \frac{\text{Term in Days}}{\text{Days in a Year}} \]
In this problem:
- Principal (P) = $[/tex]750.00
- Annual Interest Rate (r) = 6% = 0.06 (as a decimal)
- Term in Days (t) = 90
- Ordinary interest calculation uses 360 days in a year
### Step 2: Apply the values to the formula
First, compute the interest:
[tex]\[ \text{Interest} = 750.00 \times 0.06 \times \frac{90}{360} \][/tex]
### Step 3: Calculate the interest
[tex]\[ \text{Interest} = 750.00 \times 0.06 \times 0.25 \][/tex]
[tex]\[ \text{Interest} = 750.00 \times 0.015 \][/tex]
[tex]\[ \text{Interest} = 11.25 \][/tex]
So, the interest for the term is [tex]$11.25.
### Step 4: Calculate the total payment required
Add the interest to the principal to find the total payment required:
\[ \text{Total Payment} = \text{Principal} + \text{Interest} \]
\[ \text{Total Payment} = 750.00 + 11.25 \]
\[ \text{Total Payment} = 761.25 \]
### Step 5: Round to the nearest cent (if necessary)
The total payment, in this case, is already in two decimal places, so no further rounding is needed.
### Final Answer:
The total payment required to pay off the promissory note issued for $[/tex]750.00 at 6% ordinary interest over a 90-day term is:
[tex]\[ \boxed{761.25} \][/tex]
