AALL10 · Chapter 10Project Planning & Implementation🏛️ Past Licensure QuestionID: 72f42482
In engineering economics and finance, simple interest calculated on the basis of an exact 365-day year (or 366 days in a leap year) is formally known as:
In engineering economics and finance, simple interest calculated on the basis of an exact 365-day year (or 366 days in a leap year) is formally known as:
Multiple Choice Options
- A
Ordinary simple interest (360-day banker's year)
- B✓ Correct Option
Exact simple interest
- C
Compound interest
- D
Effective annual interest
Detailed Technical Solution & Explanation
In engineering economics:
•
Exact simple interest uses the exact number of days in a year: (or 366 in leap years).
•
Ordinary simple interest uses the 360-day commercial/banker's year: .
Option Analysis:
•
Option A (Ordinary simple interest (360-day ban...): Calculated on a 360-day basis (12 months of 30 days).
•
Option B (Exact simple interest): Correct. Calculated using the exact 365 days of the year.
•
Option C (Compound interest): Interest calculated on principal plus accumulated interest.
•
Option D (Effective annual interest): True annual rate accounting for compounding periods.
Reference: Mock Test 03NEC Licensure Syllabus