Option e
The interest Billy has to pay in a 30 day month is $ 906.25
Solution:
Given, Billy Thornton borrowed $150,000 at a rate of 7.25%, simple interest, with interest paid at the end of each month.
The bank uses a 360-day year.
The simple interest is given as:
[tex]\text { Simple interest }=\frac{\text { amount } \times \text {rate} \times \text {time}}{100}[/tex]
Where amount is principal amount,
rate is interest rate % per year
time is number of years
Here in our problem, amount = $150000
[tex]\text { rate } \%=7.25 \% \text { per year }=\frac{7.25}{360 \text { days }} \text { per day }[/tex]
We need to calculate for 30 day month
Time = 30 days
Plugging the values in formula, we get,
[tex]\begin{array}{l}{\text { simple interest }=\frac{150000 \times \frac{7.25}{360} \times 30}{100}} \\\\ {=1500 \times \frac{7.25}{12}=906.25}\end{array}[/tex]
Hence interest to be paid in a 30 day month is $ 906.25. Thus Option e is correct
