Question

Given p = $6000, r = 2%, t = 30 days, what is the interest earned (i)?

A. $1.20
B. $1.64
C. $20.00
D. $3.28

Answer 1

The correct answer is B. $1.64.

Step-by-step explanation:

The formula for calculating simple interest is given by the formula
`\(i = (p \cdot r \cdot t)/(100)\)` , where:

- p is the principal amount,

- r is the rate of interest per period, and

- t is the time the money is invested or borrowed for.

In this case:

- p = $6000,

- r = 2%, and

- t = 30 days.

Let's substitute these values into the formula:

`\[i = (6000 \cdot 2 \cdot 30)/(100 \cdot 365)\]`

Calculating this expression yields the interest earned (i) over 30 days.

`\[i = (360000)/(36500) = $1.6438\]`

Rounded to two decimal places, the interest earned (i) is $1.64. Therefore, the correct answer is B. $1.64.

In this calculation, we converted the annual rate (2%) to a daily rate by dividing it by 365 (the number of days in a year). This adjustment accounts for the fact that the interest is compounded daily. The final result represents the interest earned over the given 30-day period.