Question

Compute the amount of interest earned in the following simple interest problem.

A deposit of $7,000 at 6.5% for 120 days.

Answer 1

I=prt
I=7,000×0.065×120÷360
I=151.67

Answer 2

Interest earned $151.67

Explanation:

To find out the amount of interest earned by simple interest.

Deposit = $7,000

Rate of interest = 6.5%

Time = 120 days

To calculate the interest of simple interest deposit, we use the formula :

I = Prt

I = Interest of the amount

P = Principal amount

r = Rate of interest ( in decimal )

t = time (in year)

Here we have to calculate the interest for 120 days so t would be 120 ÷ 360

I = 7000 × 0.065 × 120 ÷ 360

I = $151.666 ≈ $151.67

Interest earned $151.67