Question
A company borrows money as needed on the first day of the month and repays principal and interest on the last day of the budget period, if cash is available. For the second quarter of the year, they borrowed $5,000 in April, $7,000 in May and $4,000 in June. The interest rate is 1% per month. Assuming enough money is available on June 30th to repay the debt, the total amount of interest due is $ [blank]
Answers
GPT-4o mini
To calculate the total amount of interest due on the borrowed amounts, we first need to determine how much interest is accrued for each amount borrowed based on the interest rate.
1. **Loan from April**: $5,000
- Borrowed on April 1, repaid on June 30 (3 months)
- Interest = Principal × Rate × Time
- Interest = $5,000 × 0.01 × 3 = $150
2. **Loan from May**: $7,000
- Borrowed on May 1, repaid on June 30 (2 months)
- Interest = $7,000 × 0.01 × 2 = $140
3. **Loan from June**: $4,000
- Borrowed on June 1, repaid on June 30 (1 month)
- Interest = $4,000 × 0.01 × 1 = $40
Now, we sum up all the interest amounts:
Total Interest = Interest from April + Interest from May + Interest from June
Total Interest = $150 + $140 + $40 = $330
Therefore, the total amount of interest due is **$330**.
1. **Loan from April**: $5,000
- Borrowed on April 1, repaid on June 30 (3 months)
- Interest = Principal × Rate × Time
- Interest = $5,000 × 0.01 × 3 = $150
2. **Loan from May**: $7,000
- Borrowed on May 1, repaid on June 30 (2 months)
- Interest = $7,000 × 0.01 × 2 = $140
3. **Loan from June**: $4,000
- Borrowed on June 1, repaid on June 30 (1 month)
- Interest = $4,000 × 0.01 × 1 = $40
Now, we sum up all the interest amounts:
Total Interest = Interest from April + Interest from May + Interest from June
Total Interest = $150 + $140 + $40 = $330
Therefore, the total amount of interest due is **$330**.