Diane Van Os decided to buy a new car since her credit union was offering such low interest rates. She borrowed $32,000 at 3.5% on December 26, 2012, and paid it off February 21, 2014. How much did she pay in interest?(Assume ordinary interest.)

Answer 1

First, we need to determine the term of the loan (how long she had the loan). To do this, we subtract the start date of December 26, 2012, from the pay-off date of February 21, 2014.

2014 - 2012 = 2 years
February - December = 2 months
21 - 26 = -5 days

So, the total term of the loan was 2 years, 2 months, and 5 days.

Now we need to convert this to the number of days:
2 years x 365 days/year = 730 days
2 months x 30 days/month = 60 days
Total days = 730 + 60 + 5 = 795 days

Next, we'll calculate the interest. The formula for calculating ordinary/simple interest is:

Interest = Principal x Rate x Time

In this case:
Principal = $32,000
Rate = 3.5% = 0.035
Time = 795 days

First, we need to convert the time to a fraction of a year:
Time (in years) = 795 days / 365 days/year = 2.1753 years

Now, we can calculate the interest:

Interest = $32,000 x 0.035 x 2.1753
Interest = $2,446.70

Diane Van Os paid $2,446.70 in interest on her car loan.