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 $10,000 in April, $8,000 in May and $5,000 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______.
Multiple choice question.
$230
$510
$690
Multiple choice question.
$230
$510
$690
Answers
GPT-4o mini
To calculate the total amount of interest due for the borrowed amounts over the three months (April, May, and June), we need to consider the interest for each loan based on how long each loan was outstanding.
1. **April Borrowing: $10,000**
- Duration: 3 months (April, May, June)
- Interest: \(10,000 \times 0.01 \times 3 = 10,000 \times 0.03 = 300\)
2. **May Borrowing: $8,000**
- Duration: 2 months (May, June)
- Interest: \(8,000 \times 0.01 \times 2 = 8,000 \times 0.02 = 160\)
3. **June Borrowing: $5,000**
- Duration: 1 month (June only)
- Interest: \(5,000 \times 0.01 \times 1 = 5,000 \times 0.01 = 50\)
Now, we will sum all the interest amounts:
- Total interest = Interest from April loan + Interest from May loan + Interest from June loan
- Total interest = $300 + $160 + $50 = $510
Thus, the total amount of interest due is **$510**.
1. **April Borrowing: $10,000**
- Duration: 3 months (April, May, June)
- Interest: \(10,000 \times 0.01 \times 3 = 10,000 \times 0.03 = 300\)
2. **May Borrowing: $8,000**
- Duration: 2 months (May, June)
- Interest: \(8,000 \times 0.01 \times 2 = 8,000 \times 0.02 = 160\)
3. **June Borrowing: $5,000**
- Duration: 1 month (June only)
- Interest: \(5,000 \times 0.01 \times 1 = 5,000 \times 0.01 = 50\)
Now, we will sum all the interest amounts:
- Total interest = Interest from April loan + Interest from May loan + Interest from June loan
- Total interest = $300 + $160 + $50 = $510
Thus, the total amount of interest due is **$510**.