Example Question - interest calculation example
Here are examples of questions we've helped users solve.
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
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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