Question - Calculating Simple Interest for a Loan
Solution:
To determine the simple interest, you can use the formula:\[ \text{Interest} = P \times r \times t \]where:- $$ P $$ is the principal amount (the initial amount of money),- $$ r $$ is the daily interest rate (as a decimal),- $$ t $$ is the time the money is invested or borrowed for, in days.From your image:- $$ P = $558 $$,- $$ r = 0.047\% $$ per day, which as a decimal is $$ 0.00047 $$ (divide by 100 to convert percentage to decimal),- $$ t = 3 $$ months, and since we're assuming a 360-day year, each month has 30 days, so $$ t = 3 \times 30 = 90 $$ days.Thus, the simple interest $$ I $$ is calculated as follows:\[ I = 558 \times 0.00047 \times 90 \]\[ I = 23.5218 \]Now, rounding to the nearest cent gives us:\[ I \approx $23.52 \]The simple interest on $558 at 0.047% per day for 3 months is approximately $23.52.
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