Question

Compute the exact interest on $5,870 at 12% if the money is borrowed from June to December of the same year.

Answer 1

The exact interest on $5,870 at 12% is $58.70.

Explanation:

Given information:

Principal = $5870

Interest rate = 12% = 0.12

Time = June-December = 7 months.

We know that

1 year = 12 months

1/12 year = 1 month

7/12 year = 7 month

Time = 7/12 year

Formula for simple interest:

`I=P* r* t`

where, P is principal, r is rate of interest and t is time in years.

Substitute P=5870, r=0.12 and t=7/12 in the above formula.

`I=5870* 0.12* (1)/(12)`

`I=5870* 0.01`

`I=58.70`

Therefore the exact interest on $5,870 at 12% is $58.70.