To determine the total payment required to pay off a promissory note issued for \[tex]$700.00 at 12% ordinary interest over a 180-day term, we will follow these steps:
1. Calculate the ordinary interest:
- Ordinary interest can be calculated using the formula:
\[
\text{Interest} = \text{Principal} \times \text{Interest Rate} \times \left( \frac{\text{Term in Days}}{360} \right)
\]
- Here, the principal amount is \$[/tex]700.00, the interest rate is 12% (or 0.12 as a decimal), and the term is 180 days.
2. Convert the provided values into the formula:
[tex]\[
\text{Interest} = 700.00 \times 0.12 \times \left( \frac{180}{360} \right)
\][/tex]
3. Simplify the fraction in the formula:
[tex]\[
\frac{180}{360} = 0.5
\][/tex]
4. Substitute the simplified fraction back into the formula:
[tex]\[
\text{Interest} = 700.00 \times 0.12 \times 0.5
\][/tex]
5. Perform the multiplication to find the interest:
[tex]\[
\text{Interest} = 700.00 \times 0.06
\][/tex]
6. Calculate the interest amount:
[tex]\[
\text{Interest} = 42.00
\][/tex]
7. Calculate the total payment:
- The total payment is the sum of the principal and the interest.
[tex]\[
\text{Total Payment} = \text{Principal} + \text{Interest}
\][/tex]
- Here, the principal is \[tex]$700.00 and the interest is \$[/tex]42.00.
8. Substitute the values:
[tex]\[
\text{Total Payment} = 700.00 + 42.00
\][/tex]
9. Perform the addition to find the total payment:
[tex]\[
\text{Total Payment} = 742.00
\][/tex]
Therefore, the total payment required to pay off the promissory note is \$742.00.
