Example Question - calculate simple interest
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Calculating Simple Interest
To calculate the simple interest, you can use the formula: \( \text{Interest} = P \times \frac{r}{100} \times \frac{t}{12} \) where: - P is the principal amount (initial amount of money) - r is the annual interest rate (as a percentage) - t is the time the money is invested for, in months Given in the image: - P = $1300 - r = \(4 \frac{1}{2}\) % = 4.5% - t = 3 months Plugging these values into the formula gives us: \( \text{Interest} = 1300 \times \frac{4.5}{100} \times \frac{3}{12} \) \( \text{Interest} = 1300 \times 0.045 \times 0.25 \) \( \text{Interest} = 58.5 \times 0.25 \) \( \text{Interest} = 14.625 \) Rounded to the nearest cent, the interest is $14.63.
Calculating Simple Interest
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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