Note that the total interest paid on the loan was $1,866.67.
What is the explanation for the above response?To solve this problem, we need to first calculate the total number of days the loan was outstanding.
1 year, 2 months and 6 days is equal to 14 months and 6 days or 446 days (assuming a 30-day month and a 360-day year).
Next, we can calculate the total interest paid by using the simple interest formula:
Interest = Principal x Rate x Time
Where:
Principal = $20,000
Rate = 6%
Time = 446/360 years
Time is expressed in years because we are using a 360-day year.
Plugging in the values:
Interest = $20,000 x 0.06 x (446/360)
Interest = $1,866.67
Therefore, the total interest paid on the loan was $1,866.67.
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