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Valerie wants to take out a discount loan of $569. The rate is 4.5% for 250 days. How much interest will she pay? (Be sure to round the time to the nearest hundredth.

2 Answers

7 votes

Answer:$17.41 (A+)


Explanation:


User Eugene Botyanovsky
by
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3 votes

The interest is computed from

... I = Prt

where P is the principal amount ($569), r is the rate (0.045) and t is the time in years (250/360).

... I = $569×0.045×250/360 ≈ $17.78

Please note that time is not rounded. Rather, the exact value (25/36) is used in the calculation. The only rounding of any number is done at the end, where the amount is rounded to the nearest cent. (Your text authors should know this.)

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If you follow the problem instructions (which Valerie's lender will not do), the interest is calculated as ...

... t = 250/360 = 0.6944444... ≈ 0.69 . . . . years

... I = $569×0.045×0.69 ≈ $17.67

_____

Note the rounding of intermediate numbers (time) introduces an error of about $0.11 in the answer.

User Arise
by
7.0k points
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