Question - Calculating Simple Interest
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Solution:
To determine simple interest, you can use the formula:\[ I = P \times r \times \frac{t}{T} \]Where:- $$ I $$ is the interest,- $$ P $$ is the principal amount,- $$ r $$ is the annual interest rate (as a decimal),- $$ t $$ is the amount of time the money is borrowed for, and- $$ T $$ is the total number of days in a year (360 days in this case as specified in the question).Here's what we have from the image:$$ P = $575 $$,$$ r = 4.5\% = 0.045 $$ (as a decimal),$$ t = 60 $$ days,$$ T = 360 $$ days.So we calculate the interest as follows:\[ I = 575 \times 0.045 \times \frac{60}{360} \]\[ I = 575 \times 0.045 \times \frac{1}{6} \]\[ I = 575 \times 0.0075 \]\[ I = 4.3125 \]Rounding to the nearest cent, the simple interest is $4.31.
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