Example Question - calculating simple interest
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Calculating Simple Interest
The question asks to determine the amount of simple interest earned for the use of a loan. To calculate the simple interest, you can use the formula: \[ \text{Simple Interest (SI)} = \text{Principal (P)} \times \text{rate (r)} \times \text{time (t)} \] In the problem: - Principal (P) = $5,400 - Rate (r) = 10% per year or 0.10 when expressed as a decimal - Time (t) = 18 years Plugging the values into the formula, we get: \[ \text{SI} = 5400 \times 0.10 \times 18 \] \[ \text{SI} = 5400 \times 1.8 \] \[ \text{SI} = 9720 \] Therefore, the amount of simple interest earned over the 18 year period would be $9,720.
Calculating Simple Interest for Given Principal Amount, Interest Rate, and Time
To solve for the simple interest, the formula that is used is: Simple Interest (SI) = P * r * t Where: P = principal amount (initial amount of money) r = annual interest rate (as a decimal) t = time the money is invested or borrowed for, in years In this problem, you are given: P = $542 r = 0.045% per day t = 3 months First, let's convert the daily interest rate to an annual rate and the time to years. Since the problem assumes 360 days in a year, we can find the annual interest rate by multiplying the daily rate by 360: r_annual = 0.045% * 360 = 16.2% We must express this as a decimal when using it in our calculation, so: r_annual = 16.2 / 100 = 0.162 Now convert the time to years. There are 12 months in a year, so: t_years = 3 months / 12 = 0.25 years Now we can apply these values to the simple interest formula: SI = P * r * t SI = $542 * 0.162 * 0.25 Now calculate the simple interest: SI = $542 * 0.0405 SI = $21.951 Rounding to the nearest cent, the simple interest for 3 months is: $21.95 Therefore, the simple interest on $542 at 0.045% per day for 3 months is $21.95.
Calculating Simple Interest for a Loan
To calculate the simple interest, you can use the formula: Simple Interest (SI) = P * r * t, where P = principal amount, r = interest rate per period, and t = time in periods. The values given are: P = $681, r = 0.054% per day, t = 3 months. Since the question assumes 360 days in a year, we can find the time in days. 3 months = 3 * (360/12) days = 3 * 30 days = 90 days. Next, we convert the daily interest rate into a decimal: r = 0.054% = 0.054/100 = 0.00054. Now, we can calculate the simple interest: SI = P * r * t, SI = $681 * 0.00054 * 90. SI = $33.084. Rounding to the nearest cent, the simple interest would be: $33.08. Therefore, the simple interest on $681 at 0.054% per day for 3 months is $33.08.
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