Question

A company borrows $13,000 at 5% for 90 days. Find (a) the amount of interest due and (b) the total amount that must be paid after 90 days. (a) The interest due is $ (Simplify your answer. Do not round until the final step. Then round to the nearest cent as needed.)

Answer 1

We have to use the simple interest formula

`I=P* r* t`

Where P = 13,000, r = 5% (0.05), t = 90 (0.25 years). Let's replace these values to find the interest

`I=13,000*0.05*0.25=162.50`

(a) The amount of interest is $162.50.

(b) The total amount that must be paid after 90 days is $13,162.50.

Because we have to add the total interest with the amount borrowed.